"The United States opposes new Israeli construction in East Jerusalem. The status of Jerusalem is a permanent status issue that must be resolved by the parties through negotiations and supported by the international community," read the statement by White House Press Secretary Robert Gibbs.
The dispute over east Jerusalem -- home to religious holy sites for Jews, Christians and Muslims -- is one of the thorniest issues in negotiations between Israel and the Palestinians.
"We make a distinction between the West Bank and Jerusalem. Jerusalem is our capital and remains such," Israel government spokesman Mark Regev said, according to the Associated Press.
The AP reports that the Israeli Housing Ministry said it had approved 692 new apartments in three existing Jewish neighborhoods already inhabited by tens of thousands of people.
Here more from the statement by Gibbs:
"Neither party should engage in efforts or take actions that could unilaterally pre-empt, or appear to pre-empt, negotiations. Rather, both parties should return to negotiations without preconditions as soon as possible. The United States recognizes that Jerusalem is a deeply important issue for Israelis and Palestinians, and for Jews, Muslims, and Christians. We believe that through good faith negotiations the parties can mutually agree on an outcome that realizes the aspirations of both parties for Jerusalem, and safeguards its status for people around the world."