The Middle East peace process is facing a new obstacle: further Israeli settlement expansion in the West Bank. Robert Berger reports from the VOA bureau in Jerusalem.

Olive trees are seen back-dropped by the Jewish settlement of Har Homa in East Jerusalem, 31 Mar 2008

Israel has announced plans to build nearly 900 new homes in disputed East Jerusalem, on West Bank land the Palestinians claim for a future state. The Housing Ministry says 763 apartments will be built in the settlement of Pisgat Ze'ev and 121 in Har Homa.

The decision, which is one of many on settlement construction during the past few months, throws a wrench into peace talks sponsored by the United States. Both the United States and the Palestinians say settlement expansion violates the "Roadmap" peace plan on which negotiations are based.

But Israel says East Jerusalem will remain a part of the Jewish state in any final peace agreement and it will continue to build there.

"You know we, of course, respect the Americans and we always want to work in cooperation with them, but when it comes to Jerusalem it is our decision where to build and when to build," said Israeli spokesman Arieh Mekel.

Palestinian spokesman Nabil Abu Redeineh urged the United States to pressure Israel to halt settlement activity, saying it is eroding Palestinian support for the peace process.

"All settlements are illegal according to the Roadmap and according to the international legality," he said.

The Israeli decision is casting further doubt on the U.S. goal of reaching a final peace agreement by the end of the year.