Israeli authorities Tuesday announced the approval of 942 new settler homes in annexed east Jerusalem, on the eve of the resumption of fragile peace talks between Israel and the Palestinians.
The announcement comes ahead of the expected release by Israel of 26 long-term Palestinian prisoners -- the first batch of 104 inmates to be freed in stages depending on progress in negotiations.
There was no immediate comment from the Palestinians on the latest development, but they had earlier slammed a weekend announcement that around 1,200 homes are to be built elsewhere in east Jerusalem and in the West Bank as a move aimed at "preventing" peace talks.
US Secretary of State John Kerry during a visit to Colombia on Monday urged the Palestinians "not to react adversely" to the weekend Israeli settlement announcement.
Kerry, who took the lead in securing last month's resumption of peace talks after a three-year hiatus,stressed the need for the two sides to return to the negotiating table as planned on Wednesday in Jerusalem.
The last peace talks broke down in 2010 on the issue of settlement building.
"The Jerusalem municipality has approved a construction plan for 942 homes in Gilo," an existing settlement in east Jerusalem, deputy mayor Yosef Pepe Alalu told AFP.
"This is a terrible decision which is a provocation against the Palestinians, the Americans and the whole world who oppose continued settlement building," the leftwing municipal councillor said.
Israeli settlement watchdog Peace Now said the announcement would undermine talks.
"The government is doing all it can to sabotage peace talks even before they've started," Peace Now's spokesman Lior Amihai told AFP.
Israel's housing ministry on Sunday announced tenders for the construction of 793 settlement housing units in annexed east Jerusalem and 394 elsewhere in the West Bank.
Palestinian officials reacted furiously to that announcement.
"Israel is attempting to prevent negotiations from taking place on Wednesday," negotiator Mohammad Shtayyeh said.
Kerry, speaking in Bogota, sought to neutralise the atmosphere, noting that the settlement plans were "to some degree expected," and calling for both sides to resolve their major issues.
"We have known that there was going to be a continuation of some building in certain places, and I think the Palestinians understand that," the chief US diplomat said in Bogota.
But he added: "I think one of the announcements or maybe one of them was outside of that level of expectation, and that's being discussed right now."
Kerry said he did not expect the latest developments to become a "speed bump," but he reiterated that the United States regards all settlements as illegal.
"What this underscores, actually, is the importance of getting to the table... quickly, and resolving the questions with respect to settlements, which are best resolved by solving the problem of security and borders," Kerry told reporters.
"Once you have security and borders solved, you have resolved the question of settlements. And so I urge all the parties not to react adversely or to provoke adversely, whichever party may do one or the other in any way," he said.
The EU warned on Monday that approval for the West Bank settlements threatened to torpedo the peace talks.
"Israeli settlements in the West Bank are illegal under international law and threaten to make a two-state solution to the Israeli-Palestinian conflict impossible," EU foreign policy chief Catherine Ashton's spokesman Michael Mann said.
Israel was in parallel preparing to release 26 veteran Palestinian prisoners ahead of Wednesday's talks, but had not yet given the exact timing.
Palestinian chief negotiator Saeb Erakat underlined the importance of the prisoner release for peace talks to continue.
"We hope to put into effect what we've agreed on... we hope for the release of 104 prisoners," he said.
"There is a clear understanding between us and the Americans and Israelis. Any change (in that) will mean the agreement is off the table."
Some Israeli officials have criticised the planned prisoner release.
"It's not clear to me how releasing murderers can help peace," Housing Minister Uri Ariel said.