The Israeli interior ministry has given final approval for the construction of 1,600 new settler homes in East Jerusalem.
Israel gave the initial green light for the 1,600 housing units last year during a visit to Israel by U.S. Vice-President Joe Biden, causing a diplomatic rift between Israel and the United States.
Israel considers East Jerusalem, which it captured from Jordan in the 1967, as part of its "undivided capital" -- a status not recognized abroad.
Palestinians want East Jerusalem as the capital of their future state and have said they will not resume peace talks if Israel continues to build there and in the West Bank.
Israel has said building would not begin for several years, but the country is now gripped by escalating protests for cheaper housing, raising speculation that some settlement projects could be sped up.
compiled from agency reports