Rice said in an interview with the Los Angeles Times that the Israeli plan to add 3500 housing units to the Maale Adumim settlement, east of Jerusalem, was ''not really a satisfactory response''.
The Israeli Defence Ministry this week confirmed plans for additional housing units in the settlement, where about 30,000 Jewish settlers live. The expansion, however, would not begin for years.
Rice said the United States expressed its concerns this week to the government of Prime Minister Ariel Sharon, who the administration has staunchly supported since President George Bush took office.
In the interview, published on Friday, Rice also said the Bush administration was pushing to end the right of countries
without nuclear arms to enrich uranium.
She said the US wanted countries, including Iran, to give up their right under the 1968 Nuclear Non-proliferation Treaty to enrich or reprocess uranium for peaceful purposes, saying such activity could camouflage development of a weapons programme.
''It is a loophole that countries have used, including, for instance, the North Koreans, to gain access to civilian nuclear power, but to continue activities that were closed and unclear,'' she added.
Despite US demands, Tehran has not taken ''clear steps'' to end suspicions that it was seeking to develop nuclear weapons, Rice said.