The Interior Ministry said Tuesday that the units will go up in the neighborhood of Ramat Shlomo, in the part of the city Palestinians want to be the capital of their future state. Israel has annexed East Jerusalem and refuses to restrict building there. The Palestinians and the international community regard construction there as settlement activity.

The decision was announced hours after Biden said the US will back those willing to “take risks for peace.”

The vice president said he was pleased that Israelis and Palestinians had agreed this week to resume indirect peace negotiations with US mediation. His two-day visit to Israel seemed clearly aimed at assuaging Israeli concerns that President Barack Obama has been less friendly to Israel than his predecessors. He said the relationship has always been a “centerpiece of American policy.”

“Progress occurs in the Middle East when everyone knows there is simply no space between the United States and Israel,” he said, a day after the US announced Israelis and Palestinians had agreed to begin indirect peace talks, breaking a 14-month deadlock.

“The United States will always stand with those who take risks for peace,” Biden said standing beside Israeli Prime Minister Benjamin Netanyahu.

The appearance, which included warm banter between the two men, ended with Netanyahu telling Biden that trees had been planted outside Jerusalem in honor of the vice president's late mother. “My love for your country was watered by that Irish lady,” Biden responded.