Israel has announced plans for 1,400 new settlement homes in the West Bank and East Jerusalem, a move certain to upset Palestinians during a time of already fragile peace talks.
The Israeli Housing Ministry on Friday announced that 800 homes would be built in the West Bank and 600 in East Jerusalem, both areas occupied by Israel's military since 1967.
The move had been expected as part of Prime Minister Benjamin Netanyahu's efforts to calm concerns by some in his government about the release of Palestinian prisoners.
The 26 prisoners were freed last month as part of a peace effort brokered by U.S. Secretary of State John Kerry. Israeli officials said they waited until Kerry left the region to announce the settlements.
Palestinians have threatened to walk out of the talks, and possibly pursue legal action, if Israel goes ahead with the settlements, which are built on land Palestinians want as part of a separate state.
Kerry this week wrapped up his 10th trip to the region since March. He initially set a nine-month deadline to come up with a comprehensive two-state solution to the decades-old conflict.
Before leaving Jerusalem Sunday, Kerry said he is making progress towards a scaled-back framework deal, which he said would still be a "significant breakthrough."
Meanwhile, Israelis and Palestinians continue to accuse each other of sabotaging peace efforts.
Israel says the Palestinians should recognize Israel as a Jewish state and stop welcoming as heroes the released prisoners who were convicted of killing Israelis.
Palestinians continue to complain about the settlements, as well as proposals for security arrangements in the Jordan Valley where the West Bank borders Jordan.
Israel is looking to keep troops there, saying this is essential for security reasons. Palestinians say this would violate the sovereignty of their future state.
Other key issues to be resolved include the remaining borders between the two states, the future of Jerusalem and the right of return for Palestinian refugees.