The United States was "disappointed" that Israel's housing ministry has given the go-ahead for 238 new housing units in East Jerusalem, a State Department spokesman said Friday, dpa reported.
"It is contrary to our efforts to resume direct negotiations between the parties," said Philip Crowley.
The building tenders sparked an angry Palestinian reaction, with chief negotiator Saeb Erekat saying Israel was to blame for the collapse of direct talks and was showing it preferred settlements over peace.
Crowley said the US would continue to work to create conditions for resumption of direct negotiations. Israel had informed the US beforehand - unlike a previous incident when news of new building permits came as US Vice President Joe Biden was visiting in Israel to push for peace talks.
Crowley would not say whether US envoy George Mitchell had plans to return to the region.
"We are working intensively, as we speak, with the parties, directly, to get the negotiations to resume. We are doing everything in our power, and we are making clear to the parties that we want to see this direct negotiation continue."
Prime Minister Benjamin Netanyahu's office said the decision to issue building tenders was taken by Housing Minister Ariel Atias of the ultra-Orthodox coalition Shas party.