The Israeli announcement has triggered a new row with the Palestinians, who argue that it was inconsistent with international law and the internationally-backed roadmap towards peace between Israel and Palestinians.

"Canada is disappointed by the Israeli government's decision to build more housing units in the West Bank and urges the Israeli government to reconsider this decision," said Foreign Minister Pierre Pettigrew on Wednesday.

Israel said on Monday it would build around 3500 new homes in an expansion of its largest Jewish settlements in the West Bank.

"This announcement is out of step with renewed signs of cooperation between Israelis and Palestinians," Pettigrew said.