The United States says Israel's plan to build 600 new homes in a Jewish settlement in East Jerusalem is "counter-productive."
State Department spokesman P.J. Crowley says the plan "undermines trust" between Israelis and Palestinians as the U.S. tries to relaunch negotiations between the two sides. He says the U.S. has relayed its concerns to Israel over the plan to build homes in the Pisgat Zeev neighborhood of East Jerusalem.
Palestinian officials have condemned the move as an attempt to derail the Middle East peace process. Palestinians hope to make East Jerusalem the capital of a future state.
Israeli-Palestinian peace talks have been stalled for months mainly because of disagreements about the construction of Jewish settlements.
Separately, the Palestinian Authority protested Israel's decision to include two contested holy sites in a Jewish heritage project.
The Palestinian Authority issued the protest at its weekly cabinet meeting Monday in the West Bank town of Hebron. The cabinet moved the meeting from Ramallah to symbolically assert it rights to the Tomb of the Patriarchs in Hebron.
The tomb is holy to Muslims and Jews and rests in an area the Palestinians want as part of a future state.
Palestinians also object to Israel's plan to include another shrine, Rachel's Tomb in Bethlehem, in the heritage project.
Israeli President Shimon Peres has pledged to keep the sites open to Israeli Jews and Palestinian Muslims. But Palestinian leaders say the move is an attack on the holy sites and a violation of international law.
Some information for this report was provided by AFP and Reuters.