The White House called for Israel and the Palestinians to return to the negotiating table as soon as possible and for Israel to halt the construction of new homes.
"The United States opposes new Israeli construction in East Jerusalem," Robert Gibbs, a White House spokesman, said in a statement.
"We feel that unilateral actions make it harder for people to get back together at the table, and that's what our goals are," another US official said, speaking on condition of anonymity.
"We also have mentioned in the past, and Secretary [of State Hillary] Clinton has mentioned, that we consider all the Israeli settlements to be beyond the pale of what we wish to see going on, and are not helpful, again, to getting the two sides back to the table," he said.
Binyamin Netanyahu, the Israeli prime minister, declared a 10-month suspension of settlement construction in the occupied West Bank earlier this month but the temporary halt does not include east Jerusalem.
"We make a distinction between the West Bank and Jerusalem. Jerusalem is our capital and remains such,'' Mark Regev, a government spokesman, said on Monday.
The Palestinians have refused to reopen peace talks, which broke down a year ago, until Netanyahu halts all settlement construction in the West Bank and east Jerusalem.
Palestinians claim east Jerusalem as the capital of any future state and consider Jewish neighbourhoods there to be settlements.
East Jerusalem was annexed after the 1967 Middle East war, a move not recognised by the international community.
Monday's announcement invited construction companies to bid to build 198 housing units in Pisgat Zeev, 377 homes in Neve Yaakov and 117 dwellings in Har Homa.
On November 16, Israel gave its approval for 900 new housing units in another east Jerusalem settlement.
Israel's 10-month moratorium on construction in the West Bank, which Netanyahu said was to encourage the resumption of the peace talks, excludes public buildings and building on 3,000 settlement homes already under way.
About 190,000 Israelis live in east Jerusalem and another 290,000 settlers currently live in the occupied West Bank.
Netanyahu was due to travel to Egypt on Tuesday to meet Hosni Mubarak, the president, to discuss Middle East peacemaking.