Israel OKs 1,100 new homes in east Jerusalem

Israelis walks in East Jerusalem's Jewish settlement neighborhood of Gilo in this April 2011 file photo.

Last Updated 6:09 p.m. ET

JERUSALEM - Israel's government on Tuesday granted the go-ahead for construction of 1,100 new housing units in occupied east Jerusalem, raising already heightened tensions fueled by last week's Palestinian move to seek U.N. membership.

Israel's Interior Ministry said the homes would be built in Gilo, a sprawling Jewish enclave in southeast Jerusalem. It said construction could begin after a mandatory 60-day period for public comment, a process that is largely a formality.

The European Union's foreign policy chief responded by saying Israel's plan "should be reversed" since it undermines peace negotiations with the Palestinians.

Catherine Ashton told the EU parliament Tuesday that she heard "with deep regret" that Israeli settlement plans were continuing.

Speaking in Strasbourg, France, Ashton said the expansion of settlements "threatens the viability of an agreed two-state solution" between the two sides, as backed by the EU, the United States, Russia and the United Nations.

Formal UN meeting on Palestine Wednesday
Unclear borders between Israel, Palestinians

The Palestinians claim east Jerusalem as their future capital. They have demanded that Israel halt all settlement construction in east Jerusalem and the adjacent West Bank — territories captured by Israel in the 1967 Mideast war — as a condition for resuming peace talks.

Israel says east Jerusalem, home to sensitive Jewish, Muslim and Christian holy sites, is an eternal part of its undivided capital.

Saeb Erekat, the chief Palestinian negotiator, swiftly condemned the Israeli decision, saying it amounted to "1,100 no's to the resumption of peace talks."

He urged the United States, Israel's closest and most important ally, to change its position and support the Palestinians in their quest for U.N. membership.

With peace talks stalled for the past three years, the Palestinians last week asked the United Nations to recognize an independent Palestinian state in the West Bank, east Jerusalem and Gaza Strip.

The U.S. opposes the measure and has vowed to veto the request in the Security Council. Like Israel, the U.S. says a Palestinian state can only be established through negotiations.

CBS News foreign affairs analyst Pamela Falk reports from the U.N. that the Security Council is set to refer the matter to a standing committee of all 15 nations on the Council this week. This would have been a procedural meeting, but now promises to have some fireworks, as the member nations and the Palestinian U.N. representative respond to the Israeli decision to build.

In an interview published Tuesday, Israeli Prime Minister Benjamin Netanyahu said he would not freeze settlement construction again.

Speaking to the Jerusalem Post, he said that a 10-month moratorium on new construction last year failed to yield results. He said he saw no need for another freeze.

Netanyahu says negotiations should begin without any preconditions.