Israel to build 1,000 settler housing units in East Jerusalem

The Israeli government has said that it is advancing construction plans to build about 1,000 housing units in occupied east Jerusalem that Palestinians want to be part of their future state, an Israeli official has said.

A government official said on Monday that plans include building infrastructure in the occupied West Bank that will be used by Palestinians as well as Israelis. He spoke on condition of anonymity because he was not authorised to talk to the media.

The Palestinians seek east Jerusalem, home to the city's most sensitive holy sites for Jews, Muslims and Christians, as their future capital and oppose any Israeli construction there.

Israel has said all of Jerusalem will forever be its capital, citing historical, religious and security reasons. But the international community, including the US, does not recognise Israel's annexation of the eastern sector of the contested city.

The housing announcement could flare already soaring tensions in east Jerusalem, which has been the scene of violent unrest for months.

Our correspondent said that Israeli Prime Minister Benjamin Netanyahu was under pressure by his right-wing coalition partners, who are pressing for the building of the new settlements and have threatened to withdraw their support from his government.

Tensions have been high since June, when the body of three three Israeli teenage settlers were found weeks after they were abducted by unidentified group. Israeli groups retaliated by abducting and killing a Palestinian teenager in east Jerusalem sparking riots.

The abductions set off a series of events that led to the 50-day Gaza war.

Finance Minister Yair Lapid of the centrist Yesh Atid party issued a statement late on Sunday night opposing the timing of the housing plan.

"This plan will lead to a serious crisis in Israel-US relations and will harm Israel's standing in the world," Lapid said.

The US has condemned similar Israeli construction in the past.

Last week, US officials said the Barack Obama administration refused Israeli Defence Minister Moshe Yaalon's requests to meet several top national security aides.

The administration is still miffed over negative comments Yaalon made about US Secretary of State John Kerry's Middle East peace efforts and the ongoing nuclear negotiations with Iran.