Israel has approved building permits for hundreds of housing units in three East Jerusalem settlements, two days after President Donald Trump took office in the United States.

The housing projects, on land the Palestinians seek as part of a future state, had been taken off the Jerusalem municipality's agenda in December at the last minute at the request of Prime Minister Benjamin Netanyahu, in order to avoid further censure from the administration of Barack Obama.

Israel's right-wing expects US President Trump's attitude towards settlements built in the West Bank and East Jerusalem, areas Israel captured in a 1967 war, to be far more supportive than that of his predecessor.

Netanyahu said he would hold his first conversation with Trump since he took office, by telephone on Sunday.

Jerusalem's City Hall approved the building permits for more than 560 units in the urban settlements of Pisgat Zeev, Ramat Shlomo and Ramot, areas annexed to Jerusalem in a move unrecognised internationally.

In its final weeks, the Obama administration angered the Israeli government by withholding a traditional U.S. veto of an anti-settlement resolution at the United Nations Security Council, enabling the measure to pass.

In a proposal that has drawn Palestinian outcry, Trump has also pledged to move the U.S. embassy from Tel Aviv to Jerusalem. Israel sees the entire city is its capital but most of the world does not, seeing its final status as a matter for peace negotiations.

The Palestinians have said the move would kill any prospect for peace. Negotiations broke down in 2014.

Trump has also appointed a new U.S. ambassador to Israel, David Friedman, who is considered far right on issues, including settlement building.

Commentators in Israel have said it was too early to tell what Trump's policy on these matters will actually be once he takes office. 

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