Dimitri Diliani, a Jerusalem-based member of Fatah's Revolutionary Council, said that the municipality's District Planning Commission approved the construction of the new homes on land belonging to Palestinians in East Jerusalem's Beit Hanina district.

Diliani said the commission's initial plan sought to build 1,100 housing units in Pisgat Ze'ev but legal challenges by some Palestinian owners forced the commission to scale down the project.

The Fatah official said the latest Israeli move came a "week after the same commission approved a plan to build a new settlement on 153 dunams (37.8 acres) confiscated from Palestinian in the East Jerusalem district of Beit Safafa." He said the Israeli settlement in Beit Safafa will be the first stage in the commission's plan to build 3,699 housing units for Jews in the southern areas of Jerusalem.

Diliani said the Israeli plan came three months after the decision to add new 900 housing units to the settlement of Gilo, built on Palestinian land between Jerusalem and the West Bank city of Bethlehem, and two weeks after the Israeli defense establishment resumed the construction of the separation wall south of Jerusalem.

Palestinian official Ghassan Al-Khatib denounced the decision as "another Israeli violation of international law.” He said it threatened to derail efforts to resume negotiations that have not convened since a war in Gaza in December 2008.

Khatib, a former Cabinet minister who heads the Palestinian press office, said Palestinians would pursue what he called a "peaceful, legal, public struggle against Israeli settlement expansion and occupation.”

Israel captured East Jerusalem in the 1967 War, annexed it, and has since built settlements there that are home to more than 200,000 Israelis. Control over the city has been seen as the most sensitive and thorniest issue of the Middle East conflict. Palestinians hope to make East Jerusalem the capital of their future state but Israel says the city is its eternal capital.

Israeli Prime Minister Benjamin Netanyahu announced last November a 10-month partial moratorium on new housing in the West Bank. This did not apply to East Jerusalem.