Israel has given the green light for 600 new homes in a Jewish settlement in annexed Arab east Jerusalem, the Haaretz daily reported yesterday.

The development in the Pisgat Zeev neighbourhood, which has been planned for some years, was approved with modifications by the interior ministry's Jerusalem district urban planning committee on January 12.

Interior ministry spokesman Efrat Orbach said: "It's an old project, the principle of which was approved several years ago."

The original plan had been for 1,100 housing units but it was scaled back, Haaretz said. A start date for construction has not yet been approved, according to the documents.

The Palestinians reacted angrily to the disclosure.

"We strongly condemn the Israeli decision and call on the US administration to make a clear statement on this policy of Israeli settlement in east Jerusalem and the Palestinian territories in general," chief Palestinian negotiator Saeb Erakat said.

"This decision is part of an Israeli policy aimed at aborting any international effort to relaunch the peace process, especially the American efforts."

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