World leaders have expressed regret and disappointment after Israel announced it would not extend the 10-month moratorium on new settler homes in the West Bank.
Israeli settlers resumed building across the West Bank on Monday, after the partial freeze on construction expired, but there was widespread praise for Palestinians, who held back on threats to quit peace talks over the move.
"We are disappointed, but remain focused on our long term objectives," Philip Crowley, the US state department spokesman, said.
"One way or the other the parties have to find a way to continue direct negotiations."
Ban Ki-moon, the UN secretary-general, reminded Israel on Monday that the building of settlements on occupied territory was illegal, and said he was "disappointed" by the government's failure to extend its partial ban on further West Bank construction.
European leaders were unanimous in their concern at the Israeli decision, and warned that the Middle East peace talks could founder on the issue.
William Hague, Britain's foreign secretary, said he was "very disappointed" and would personally pass on his appeal to Avigdor Lieberman, the Israeli foreign minister, at the UN General Assembly in New
Ahmet Davutoglu, Turkey's foreign minister, joined the growing international chorus against Israel, saying that its one-time ally was not showing signs that it wanted peace.
'Settlement must stop'
Nicolas Sarkozy, the French president, sharing a joint press conference with Mahmoud Abbas, the Palestinian president, expressed his "regret that the unanimous calls for the moratorium on Israeli settlement building to be extended were not listened to. I deplore this".
He said that the 10-month freeze "should have been extended to give negotiation a chance. I say this in front of president Abbas: 'settlement must stop'."
The French leader said he would ask Abbas, Binyamin Netanyahu, Israel's prime minister, and Hosni Mubarak, Egypt's president, to peace talks by the end of October.
"We will not have any quick reactions," Abbas said at the news conference.
"After this chain of meetings, we will be able to put out a position that clarifies the Palestinian and Arab opinion on this issue now that Israel has refused to freeze settlements."
Direct Israeli-Palestinian talks resumed in September after a 20-month hiatus, under the auspices of the United States but without fellow peace Quartet members the EU, Russia and the United Nations.
Jacky Rowland, Al Jazeera's correspondent in Paris, said Abbas' call for an extension on the moratorium appeared a "desperate measure".
"This really is the bottom line ... for President Abbas, he needs some kind of gesture in order for him to to be able to argue to his own public that there is any point at all to continue with this process.
"Otherwise [he] is left entirely exposed - how can he justify to his own constituency that he is going to continue with these talks with the Israelis while flagrantly building is continuing?"
Meanwhile, Netanyahu called on Abbas not to abandon the peace talks after the freeze expired at midnight on Sunday.
"I call on president Abbas to continue with the good and honest talks we have just embarked upon, in an attempt to reach a historic peace agreement between our two peoples," Netanyahu said after allowing the partial moratorium on settlement construction to lapse.
However, Khaled Meshaal, the exiled leader of Hamas, called on Abbas to uphold his promise and quit the talks.
"I call on my brothers at the Palestinian Authority, who had stated they would not pursue talks with the enemy [Israel] if it continued settlement construction, to hold to their promise," he said on Monday.
"To negotiate without a position of strength is absurd."
The moratorium ended as the United States urged Israel to extend the freeze, urging a compromise over the end of the ban.
As the freeze ended, around 2,000 people, including hundreds from Netanyahu's own right wing Likud party and a large contingent of flag-waving evangelical Christians, flooded into Revava settlement in the northern West Bank for a rally.
Standing in front of a stage draped with a huge banner emblazoned with the slogan "We salute the pioneers of Judaea and Samaria," the crowds counted down from 10 to zero as the sun set over the hills.
Earlier, settlers laid the cornerstone for a new nursery school in the nearby settlement of Kiryat Netafim in an event organised by Danon, a political hardliner but not a settler himself.
But settlers conceded that despite the symbolic displays, there was unlikely to be a flood of construction.
"We are getting back to business as usual and building but we will respect the prime minister's request," said David Ha'ivri, head of the Samaria regional council.
Jewish settlement on occupied Palestinian land is one of the bitterest aspects of the conflict between Israelis and Palestinians.
Currently, around 500,000 Israelis live in more than 120 settlements across the West Bank and east Jerusalem, territories the Palestinians want for their promised state.
A previous round of direct talks collapsed in December 2008 when Israel launched a war on the Gaza Strip.