Washington is "deeply disappointed by the announcement of advanced planning for new housing units in sensitive areas of east Jerusalem," State Department spokesman PJ Crowley told reporters.
Crowley added that the United States sees the announcement as "counter-productive to our efforts to resume direct negotiations between the parties," and noted that it "undermines trust."
He said the issue would be one of the talking points when Secretary of State Hillary Clinton meets in New York on Thursday with Israeli Prime Minister Benjamin Netanyahu.
"We have long urged both parties to avoid actions which could undermine trust, including in Jerusalem, and will continue to work to resume direct negotiations to address this and other final-status issues," Crowley stated.
The State Department spokesman also said that the construction announcement might have been meant to "embarrass the prime minister and to undermine the process."
An Israeli official addressed the US criticism of east Jerusalem housing construction permits, saying that "there is no doubt that the finger of blame is pointed at Eli Yishai and the Interior Ministry. They are the ones responsible for announcing the permits."
The official also noted that as per an earlier agreement between Interior Minister Yishai and Prime Minister Benjamin Netanyahu, the announcement was to be made on October 20, but for some reason it was postponed until this past weekend.
"The timing is unusual, no doubt, but it is uncertain that the announcement was made intentionally on this date," said a minister who did not want to be identified. "It is not impossible that it was made as result of inattention and carelessness."
Earlier Monday it was reported that the Jerusalem District Planning and Construction Committee approved the construction of 32 housing units in the eastern part of Pisgat Ze'ev, a neighborhood located beyond the Green Line.
In response, the Palestinians accused Israel's prime minister of working to sabotage peace talks by approving the building of housing units beyond the Green Line.
"We thought that (Benjamin) Netanyahu was going to the United States to stop settlement activity and restart negotiations but it is clear to us that he is determined to destroy the talks," chief Palestinian negotiator Saeb Erekat told AFP.
Attila Somfalvi contributed to the report
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