Israel's government says it intends to build 690 new homes in two West Bank settlements. Palestinian officials say the plan is a violation of the U.S.-backed road map peace plan.
The settlement construction plan is the largest proposed by Israel's government since Israel's Prime Minister Ehud Olmert took office on May 4.
Under the plan, 348 houses will be built in the Maaleh Adumim settlement and 342 houses in Beitar Ilit. Both settlements border Jerusalem and house more than 60,000 people.
Palestinian officials were quick to condemn the planned expansion. Saeb Erekat, who is responsible for negotiating with the Israeli government on behalf of Palestinians, says the expansion of the settlements undermines what is left of the peace process.
"I condemn this in the strongest possible terms," he said. "I think the choice for Israeli is either settlements or peace - they cannot have both. This undermines all efforts being exerted to revive the peace process."
Under the internationally backed road map peace plan Israel is to suspend settlement construction activity in the West Bank, while Palestinians are to halt attacks on Israelis.
Mark Regev a spokesman for Israel's Foreign Ministry says the expansion of the two settlements is not a violation of the plan because, he says, there is an international consensus that Israel will be allowed to keep large settlement blocs close to its border.
"If we are building inside an existing community where it is really understood that the community will always be part of Israel, I do not see this as a problem," he said.
Regev says Israel remains committed to the road map peace plan, which eventually calls for a two-state solution between Israel and the Palestinians.
A spokesman for the U.S. Embassy in Tel Aviv says borders between Israel and the Palestinians should be part of a negotiated settlement, and that the United States believes Israel should not expand its presence in the West Bank.