|The international community does not view Israeli settlements in territory annexed after the 1967 as legitimate [EPA]
International leaders from Europe to the United States have lashed out at Israel's decision to build 1,300 homes in East Jerusalem, warning it risks wrecking an already fragile peace process with the Palestinians.
Palestinians see East Jerusalem, captured by Israel in the 1967 war, as the capital of their future state. The international community has not recognised Israel's annexation of the city's eastern sector.
Barack Obama, the US president, led the world chorus against Israel's plan, calling the move unhelpful to the pursuit of peace with the Palestinians.
"This kind of activity is never helpful when it comes to peace negotiations," Obama told reporters during a visit to Indonesia on Tuesday. "I'm concerned that we're not seeing each side make the extra effort to get a breakthrough that could finally create a framework for a secure Israel living side-by-side in peace with a sovereign Palestine".
United Nations chief Ban Ki-moon expressed concern to Netanyahu in a meeting at the organisation's headquarters in New York.
Ban "expressed concern at the resumption of the settlement activity and recent announcements of further settlement construction in east Jerusalem," a UN spokesman said.
The foreign ministry in Russia, a member of the Middle East peace Quartet along with the United States, United Nations and European Union, said that it views the new construction with "the most serious concern".
"We find it essential that the Israeli party refrained from the declared construction and on the whole kept to a moratorium on settler activity on the west bank of the Jordan river and in east Jerusalem," the foreign ministry said.
British Foreign Secretary William Hague said the Israeli announcement was "extremely disappointing and unhelpful".
Catherine Ashton, the European Union's foreign policy chief, also joined the calls for Israel to drop the settlement plans, saying she was "extremely concerned".
And Ekmeleddin Ihsanoglu, the Organisation of the Islamic Conference head, urged the international community "to oblige Israel to put an end to all forms of settlement building that damages the inalienable rights of the Palestinians.
Meanwhile, the office of Binyamin Netanyahu, the Israeli prime minister, released a statement that said Jerusalem is "not a settlement".
"Israel sees no link between the peace process and its development plans in Jerusalem," the statement said. It added that no Israeli government had ever curbed building in the city since seizing and annexing the eastern sector during the 1967 war.
On Monday, Israel announced plans to build 1,300 apartments in Jewish settlements in East Jerusalem. Palestinians claim East Jerusalem as the capital of a future state.
Palestinians have said they will not resume direct peace talks, restarted at the White House in September, unless Israel halts construction in the West Bank and East Jerusalem. They have called for Israel to renew a 10-month West Bank settlement "freeze" that expired in September - and add Jerusalem to it.
At the state department in Washington DC, the United States swiftly disputed Israel's claim that new settlements authorised in east Jerusalem had no bearing on peace talks.
"There clearly is a link in the sense that it is incumbent upon both parties ... they are responsible for creating conditions for a successful negotiation," spokesman Philip Crowley said.
Israel's decision to approve the new homes in mainly Arab East Jerusalem sparked a furious reaction from the Palestinians, who accused Netanyahu of being determined to sabotage peace talks.
Chief Palestinian negotiator Saeb Erakat on Tuesday called on the international community to move toward recognition of a Palestinian state in response to the Israeli defiance.
Netanyahu himself, on a visit to the United States, the main broker of the peace process, urged Palestinians to return to the negotiating table, warning that the Jewish state would not yield to international dictates.
Direct peace talks resumed September 2 but quickly ran aground when Israel's moratorium on West Bank settlement construction expired, prompting the Palestinians to freeze talks until Israel reimposes the ban.
The state department said Hillary Clinton, the secretary of state, will address the issue of East Jerusalem settlements when she meets Netanyahu in New York on Thursday.