United Nations Secretary General Ban Ki Moon has warned that Israeli plans for a new Jewish settlement would deliver an almost fatal blow to chances of a peace deal with the Palestinians.
Israel announced the plans in a strategically sensitive area of occupied land near East Jerusalem
in response to a United Nations vote that upgraded the Palestinians' status to that of a non-member observer state.
Mr Ban says Palestinians in East Jerusalem could be completely cut off from the rest of the West Bank, the BBC reports.
Israel authorised 3000 additional housing units a day after the UN voted to upgrade Palestinian status.
Israeli Prime Minister Benjamin Netanyahu has vowed to continue with the building plans.
The UN General Assembly backed a proposal on Thursday by Palestinian Authority President Mahmoud Abbas to change the Palestinians' status at the UN to that of non-member observer state.
