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The Israel Lands Administration (ILA) on Thursday named the winners of the tenders to build 307 housing units in East Jerusalem's Har Homa neighborhood. This will make it harder to stop the planned building in this controversial district and could jeopardize peace talks with the Palestinians.

The publication of the tenders some two months ago raised a sharp American and Palestinian protest. A senior Palestinian official said the Palestinians may stop the negotiations over a final-status arrangement with Israel if Israel continues to build in East Jerusalem.

An ILA official said Thursday that from the moment the winners' names are announced, it would be very hard to stop construction work.

The entrepreneurs must sign a development contract with the state within 60 days of the announcement, and then complete the construction within three years, he said. This means that even if the government wants to stop the construction it will run into legal difficulties to revoke the contract and will have to pay considerable compensation fees.

Five companies won the tenders - Ir David, Dalia Eliasfor, Mei-Tal, Ish Hiram and Shahan - for sums ranging from NIS 17 million to NIS 1.5 million. The ILA is to receive some NIS 42 million for marketing the site, which is to be built on Har Homa's eastern side.

U.S. Secretary of State Condoleezza Rice said, when the tenders were first published, that the new construction in Har Homa "doesn't help to build confidence."

The Palestinians delayed the beginning of the negotiations on a final-status arrangement following the tender's publication and the issue came up in the talks between Palestinian Authority Chairman Mahmoud Abbas and President George W. Bush during the latter's visit to Ramallah earlier this year.

Jerusalem sources said Thursday that the Americans had hoped Israel would not advance the tenders so as to avoid harming the negotiations. A few weeks ago Haaretz reported that Prime Minister Ehud Olmert had asked for an update on the new construction in Jerusalem.

Adnan Husseini, Abbas's adviser on Jerusalem affairs, said that the ongoing construction in East Jerusalem neighborhoods puts the Palestinian negotiation team in a difficult situation vis-a-vis their people. If the construction continues, the Palestinians may suspend the peace talks, he said.

The Prime Minister's Office issued a statement that "as far as we've managed to check, we were not updated about the tenders' winners. The [Har Homa] tender was never suspended, so it is natural that it would have winners."

Israel is planning to build 1,100 new apartments for Israelis in East Jerusalem, Housing Minister Ze'ev Boim said this week - 370 apartments in Har Homa and 750 in Pisgat Ze'ev.