Israel has announced plans to build 1,400 new homes in the occupied West Bank and East Jerusalem.
The country's Housing Ministry said on Friday that it planned to construct 801 housing units in the West Bank, another 600 in East Jerusalem, and re-issue tenders for 582 units in East Jerusalem, all on land seized during the 1967 Six Day War.
The announcement enraged some of the coalition partners of Benjamin Netanyahu, the Israeli prime minister, as well as Palestinians, who want the land for their future state and who have accused Israel of lacking a commitment to peace negotiations.
This is a bad idea which Yesh Atid will do all it can to ensure remains just an idea that will not be implemented.
But even Netanyahu's largest coalition ally, the centrist Yesh Atid party, has criticised Friday's move.
"This is a bad idea which Yesh Atid will do all it can to ensure remains just an idea that will not be implemented," Yair Lapid, who also serves as Israel's finance minister, said.
In a statement, Saeb Erekat, chief Palestinian negotiator, said: "The recent announcement shows Israel's clear commitment to the destruction of peace efforts and the imposition of an apartheid regime."
He called the announcement a "test" of the US administration's ability to hold Israel accountable for its attempts to derail peace efforts.
John Kerry, the US secretary of state, has made multiple trips to Jerusalem since peace talks resumed in July 2013 after a three-year deadlock.
Kerry recently condemned Israel's practice of establishing settlements on occupied territory, calling them "illegitimate".
"Let me emphasise that the position of the United States is that we consider now, and have always considered, the settlements to be illegitimate," Kerry said at a November 2013 press conference.
Friday's announcement followed a pattern whereby Israel issues new building permits shortly after releasing Palestinian prisoners.
A group of 26 Palestinians were freed at the end of December 2013 under terms of an agreement brokered by Washington as part of ongoing peace negotiations.
Anti-settlement watchdog, Peace Now, said Israel has planned to build about 5,349 new homes in the West Bank and East Jerusalem since direct peace talks resumed.
"Netanyahu says that he is in principle in favour of a two-state solution but he has said in previous instances that the locations of these housing units would in any case be part of Israel - no matter what the outcome of a peace accord," Al Jazeera's Tom Ackerman, reporting from Jerusalem, said.
Previous peace negotiations between Israel and Palestine fell apart in 2010 due to a dispute over settlement construction and resumed talks have made very little progress.
More than 500,000 Jewish settlers currently live in East Jerusalem and the West Bank. Most countries consider Israel's settlements to be illegal.