Israel completed its handover of the West Bank town of Tulkarem to the Palestinians Tuesday.

Tulkarem is the second town transferred to the Palestinians, after Jericho last week.

The transfer of five West Bank towns is one of the steps Israeli and Palestinian leaders agreed to at a summit in Egypt last month. Israel has yet to hand over three other towns - Qalqiliya, Bethlehem and Ramallah.

Meanwhile, Israel confirmed plans to build 3,500 new homes in Maale Adumin, the largest Jewish settlement in the West Bank.

Palestinians condemned the move as a violation of the internationally-backed "Road Map" peace plan and said it threatens the newly-energized Middle East peace process.

The peace plan calls on Israel to freeze its settlement activity in the West Bank. It also requires the Palestinians to dismantle militant groups.