UN Secretary General Ban Ki-moon has condemned an Israeli plan to build 1,600 new housing units in East Jerusalem as incompatible with international law.
The plan also hampers any realistic peace process, a spokesman for the secretary general said in New York late Tuesday, dpa reported.
The proposed settlements would be located in an area that the Palestinians hope eventually to make their capital.
Ban's comments came after US Vice President Joe Biden harshly condemned the plan Tuesday during an official visit to Jerusalem, highlighting a rare public disagreement between the United States and Israel.
Israel's announcement "undermines the trust we need right now" said Biden, who nonetheless expressed optimism about resuming peace negotiations through Washington-brokered indirect, or "proximity," talks between the Israelis and Palestinians.
The Palestinians envision East Jerusalem as the future capital of their own state, which is a key goal of the peace negotiations that have not taken place for more than a year.
The Palestinians warned the latest construction announcement could derail any attempts at indirect talks before they even begin.
The Israeli Interior Ministry announced the new units would be built in the Ramat Schlomo area of East Jerusalem.