In a slap to both Israel and the United States, which now sanctions the expansion of illegal settlements, Annan on Tuesday expressed his strong disapproval and demanded that Tel Aviv should stop all new construction.
"The secretary-general expresses strong concern over reports of Israeli settlement expansion in the West Bank, through the government of Israel's recent publication of tenders for construction of new housing units," UN spokesman Stephane Dujarric said.
"The secretary-general calls on the government of Israel to cease this settlement expansion and to fulfill its 'road map' obligations," Dujarric added.
The ''RoadMap'' peace plan for the Middle East - put forward in 2003 by international mediators including US, Russia, the European Union and the United Nations - calls for a freeze on all settlement activity including the construction of new housing.
But Israel has announced plans for 1530 new settler homes in the occupied West Bank after Washington signaled on Wednesday that it could accept building within existing construction lines of settlements that have spread on territory Israel captured in the 1967 war.
The United States had earlier insisted on the construction freeze laid out in the roadmap.
Palestinians said the US policy shift had undermined the peace process and their dream of a viable state in the West Bank and Gaza.