United Nations Secretary General Ban Ki-moon has said Israeli settlement building anywhere in occupied territory is illegal and must stop.
Mr Ban is in the Middle East to meet Israeli and Palestinian leaders and press them to resume peace talks, the BBC reports.
Israel's controversial announcement of plans to build 1600 more homes in East Jerusalem has inflamed tensions in the region and between Israel and the United States.
"The world has condemned Israel's expansion plans in East Jerusalem," Mr Ban said. "Let us be clear: all settlement activity is illegal anywhere in occupied territory, and this must stop."
Mr Ban has stated the goal of an Israeli-Palestinian peace agreement - including a Palestinian state - within two years. He said he hoped to see Jerusalem become the capital of both an Israeli and a Palestinian state.
Middle East peace mediators the US, Russia, the European Union and the UN have also issued their strongest condemnation so far of the settlements and called for a final peace agreement to be concluded within two years.
On Sunday, US special representative George Mitchell will arrive in in Israel to get so-called proximity talks going between the Israelis and the Palestinians.
Israel's Prime Minister Benjamin Netanyahu will then travel to Washington, where he is expected to meet Secretary of State Hillary Clinton and possibly President Barack Obama.
Meanwhile violence in the West Bank is continuing, with a Palestinian teenager shot dead and another badly hurt in clashes with Israeli troops near the city of Nablus, according to medical officials said.
The Israeli military says its forces were responding to what it called a "violent riot" by Palestinian youths who were throwing stones at Israeli settlers, the BBC reports.
However, the military says no live bullets were fired, only tear gas and rubber bullets.
