Israeli Prime Minister Benjamin Netanyahu has vowed settlement building in east Jerusalem will continue, despite a diplomatic spat over the issue with key ally the United States.
Western-backed Palestinian president Mahmud Abbas responded by saying he would not return to peace talks without a complete settlements freeze.
The US State Department declined to comment on the hawkish Israeli premier’s remarks, saying it was awaiting a ‘formal’ response.
“Construction will continue in Jerusalem as this has been the case over the past 42 years,” Netanyahu told members of his Likud party.
Israel occupied mainly Arab east Jerusalem in the 1967 Six-Day War and later annexed it in a move not recognised by the international community.
Last week’s go-ahead for 1,600 new homes for Jewish settlers in the east of the city infuriated Washington, coming during a visit by US Vice President Joe Biden aimed at promoting renewed peace talks with the Palestinians.
Israel’s ambassador to Washington said bilateral relations have hit a 35-year low.
“Israel’s relations with the US are facing the most severe crisis since 1975,” the Yediot Aharonot newspaper quoted ambassador Michael Oren as telling consuls in the United States.
US calls in 1975 for a partial Israeli withdrawal from Egypt’s Sinai peninsula, then under Israeli occupation, ignited a major crisis between the two allies.
Last week’s announcement sparked fury among the Palestinians, who view east Jerusalem as their capital and see the growth of Israeli settlements as the main obstacle to the establishment of their promised state.
“There will not be any negotiations with the continuation of settlement activity,” Abbas’s spokesman Nabil Abu Rudeina quoted him as saying on Monday.
“These policies do not create an appropriate atmosphere for the resumption of the peace process.”
Senior US officials including Biden and US Secretary of State Hillary Clinton have slammed both the new construction and the announcement’s timing as insulting and damaging to peace efforts.
On Monday State Department spokesman Philip Crowley told reporters Hillary Clinton had asked Netanyahu for a formal response to US demands.
“When she outlined what she thought appropriate actions would be to the prime minister, she asked for a response by the Israeli government. We wait for the response,” Crowley said.
Still, he uttered the first conciliatory words in recent days from the US, reaffirming that “Israel is a strategic ally of the US and will continue to be so.”
And Netanyahu won backing from Obama’s political opponents.
“In an effort to ingratiate our country with the Arab world, this administration has shown a troubling eagerness to undercut our allies and friends,” said House Republican Whip Eric Cantor, the only Jewish Republican in the House of Representatives.
Also on Monday, EU foreign policy chief Catherine Ashton said Israel’s move “endangered and undermined the tentative agreement to begin proximity talks.”
The March 9 green light for the new construction in east Jerusalem’s Ramat Shlomo district came just two days after the Palestinians had reluctantly agreed to hold indirect negotiations with Israel.
Direct talks collapsed after Israel launched a devastating 22-day military offensive in December 2008 against the Islamist Hamas-run Gaza Strip aimed at halting Palestinian rocket fire.
Israeli troops wounded 10 Palestinians on Monday as they opened fire on dozens of students hurling stones at a West Bank checkpoint to protest against Israel’s actions in east Jerusalem, Palestinian medics and witnesses said.
As tensions mounted, Israel barred men aged under 50 and non-Muslims from entering Jerusalem’s flashpoint Al-Aqsa mosque compound for the fourth day running.
The compound is Islam’s third holiest site after Mecca and Medina in Saudi Arabia. It is also Judaism’s holiest site as the location of the Second Temple, destroyed by the Romans in 70 AD.
Police and demonstrators have clashed in and around the compound on the past two Fridays, and police fear Monday’s reopening of a 17th century synagogue a few hundred metres (yards) from the compound could reignite protests.
The Islamist Hamas movement ruling the Gaza Strip declared Tuesday a “day of rage and alarm” over the opening of the Hurva synagogue, calling on Arabs and Muslims to “come to the aid of Jerusalem and Al-Aqsa.”
“Israel is playing with fire and touching off the first spark to make the region explode,” exiled Hamas leader Khaled Meshaal warned.