Arab League Secretary General Amr Moussa said on Tuesday that he would support a Palestinian pull out of the direct peace talks with Israel if there is renewed settlement building in the West Bank, DPA reported.
The statement comes two days after an Israeli 10-month moratorium on expanding Jewish settlements expired.
Palestinian President Mahmoud Abbas has postponed a decision on whether to remain in the recently-reconvened direct talks until an Arab League meeting on October 4.
In a statement from the Arab League's headquarters in Cairo, Moussa said that a continuation of Palestinian-Israeli peace talks while settlement expansion continued would be a "waste of time".
Moussa added that it would also be a "waste of Arab interests" for talks to continue with settlements being built on what would be Palestinian land in a two-state solution based on 1967 borders.
Moussa's statements are a signal that when Abbas meets with the Arab League to consult with them on his next diplomatic steps, the body may advise him to pull out of direct talks so long as Israeli policy regarding settlements remained unchanged.
Abbas has requested Israeli Prime Minister Benjamin Netanyahu extend the moratorium by two to three months.
Moussa said that Arab member-states were supporting the Palestinian president's position that Israel "must choose between peace and the continuation of settlements."
Abbas was quoted on French radio station Europe 1 on Monday saying that "we do not want to halt these negotiations, but if the construction continues, we will be obliged to halt them."
The construction of Israeli settlements in the West Bank has been a sticking point in the latest round of US-mediated peace talks between Israel and the Palestinians.
Israel did not extend the 10-month construction freeze that expired late Sunday, despite international calls to halt settlement expansion and warnings from Abbas that he would walk out of the talks if construction continued.