Israeli Defense Minister Ehud Barak has given official approval to the construction of 455 housing units in Jewish settlements in the Israeli-occupied West Bank.  The move counters U.S. calls for a freeze on settlements. Palestinian officials are calling the decision a setback for the peace process.

Negotiations have been stalled for months, and analysts say the Israeli government's decision to expand a number of settlements appeared to be a major blow to efforts to revive them.

An Israeli Defense Ministry statement said Defense Minister Ehud Barak has authorized the construction of 455 housing units in settlement blocks.  The government of Prime Minister Benjamin Netanyahu defends its policy saying the construction within existing settlements is necessary to accommodate natural growth.

The Palestinians have said they will not return to negotiations as long as Israeli settlement expansion continues.

Palestinian President Mahmoud Abbas' official spokesman, Nabil Abu Rudeineh, accused Israel of laying further obstacles to peace.

"We consider this a real violation for every single effort that has been exerted in the last several months," he said.  "This policy is going to ruin everything.  Nobody will be ready to move this issue.  This is completely unacceptable."

Palestinian officials say they are looking forward to a visit in the coming days by the U.S. special envoy for the Middle East, George Mitchell.  The Palestinians say they are hoping for an announcement that Washington will step up the pressure on Israel to halt construction in the settlements.

Some analysts say announcement by Israel comes as disappointment grows among both Israelis and Palestinians over Washington's approach to the conflict. 

"The Israeli peace camp, as well as the Arab peace camp, is losing trust in the United States and in President Obama and what looked like a very positive and promising momentum that was started back in June in Cairo has been already lost," said Akiva Eldar, a senior political columnist at Tel Aviv's Haaretz newspaper.  "Something quite dramatic has to happen in order to give people again some hope that it is not business as usual."

In his landmark speech from Cairo in June, President Obama said there can be no progress toward peace without a halt to settlement construction.  Israel at the time said it hoped the speech would lead to a new era of reconciliation between Arabs and Israelis.

Nearly 300,000 Israelis live in the West Bank settlements, which are on lands captured by Israel in the 1967 Arab Israeli war.

The West Bank has never been formally annexed by the Jewish State.  

Israeli proponents of the settlements say the existence of the communities is necessary for the survival of the Jewish State.  They say Israeli disengagement from the area would make it easier for Palestinian militants to attack Israel like those in Gaza have been doing since Jewish settlers evacuated the Strip in 2005.