Israel is to press ahead with the planned construction of 2,610 settler homes in annexed east Jerusalem, a watchdog said Wednesday, angering Palestinian leaders and prompting US President Barack Obama to express concern.
The housing units, which have been slated for construction since 2012 in the neighbourhood of Givat Hamatos, were given final approval last week, Peace Now said.
Hagit Ofran, spokeswoman for the Israeli non-governmental group, told AFP the government could now publish tenders for the project, but that it would be months before building actually began.
The watchdog said the plans damaged prospects for peace and an eventual independent Palestinian state.
"Givat Hamatos is destructive to the two-state solution," it said.
"It divides the potential Palestinian state... (Prime Minister Benjamin) Netanyahu continues his policy of destroying the possibility of a two-state solution."
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The timing was a political decision, Ofran said, but the exact reason was unclear.
Housing Minister Uri Ariel, who himself lives in a settlement, insisted on army radio it was part of "the normal process of authorisation necessary before any construction project in Jerusalem".
Hanan Ashrawi, a leader of the Palestine Liberation Organisation, criticised the Givat Hamatos plans, saying in a statement the Israeli government was more interested in "stealing land than making peace".
And at a White House meeting Wednesday, Obama raised with Netanyahu what a spokesman called the "troubling" development of the new homes.
Israel's settlement building in the occupied West Bank and annexed Arab east Jerusalem, which is illegal under international law, has caused the breakdown of several rounds of peace talks.
The settlements are built on land the Palestinians want for their future state.
Some 200,000 settlers live in east Jerusalem neighbourhoods, as well as some 306,000 Palestinians, according to Jerusalem's municipality.