( Reuters )- Israeli and Palestinian negotiators planned to meet on Monday for a second round of U.S.-backed peace talks bogged down by disputes over Jewish settlement building near Jerusalem.
The Palestinians said substantive negotiations over borders, and the fate of Jerusalem and Palestinian refugees would not begin until Israel committed to halting all settlement activity, as called for under the long-stalled "road map" peace plan.
The road map also calls on the Palestinians to rein in militants, an obligation that Israel says must be fulfilled in the occupied West Bank and Hamas -controlled Gaza Strip before a Palestinian state can be established.
The first round of negotiations that followed a U.S.-sponsored peace conference in Annapolis, Maryland, opened in discord on December 12 with the Palestinians demanding Israel drop plans to build some 300 new homes in an area near Jerusalem known to Israelis as Har Homa and to Palestinians as Abu Ghneim .
On the eve of the second round of negotiations scheduled for Monday, Israel's Construction Ministry unveiled a proposal to build 740 new homes next year on occupied land near Jerusalem -- 500 in Har Homa and 240 in the Maale Adumim settlement.
Palestinian President Mahmoud Abbas said he could not understand why Israel was "carrying out frenzied settlement activity during final status negotiations."
He added that Palestinian negotiators would raise the issue at every opportunity. Prime Minister Salam Fayyad said Israel's plans to build more homes was "sabotaging negotiation efforts."
"Building more homes in the settlements in Jerusalem and elsewhere in the Palestinian territories contravenes the road map. The Israelis must adhere to their road map commitments," Fayyad said.
Israeli Foreign Ministry spokesman Arye Mekel said Israel hoped "it will be possible to advance negotiations, to move them forward" during Monday's session, despite the disputes.
The Palestinians accuse Israel of ignoring its obligations under the road map, which explicitly calls for a halt to all settlement activity, including so-called "natural growth."
Prime Minister Ehud Olmert's spokesman, Mark Regev , said Israel would meet its obligations by not allowing "outward growth" of existing settlements, by preventing new settlements from being built, and by not confiscating any more Palestinian land.
But Israel will allow construction to continue within built-up areas of existing settlements. Israel wants to keep Maale Adumim and other large settlement blocs in any peace deal.
Abbas is expected to meet Olmert as early as Tuesday to follow up on last month's Annapolis conference in which the leaders set the goal of negotiating a statehood agreement before U.S. President George W. Bush leaves office in January 2009.
Bush will visit the region early next month.
It is unclear how any peace agreement, if reached, would work with the Palestinian territories divided between Abbas's Western-backed government in the West Bank and a rival Hamas administration running the Gaza Strip.