Illegal housing Jerusalem
© Ariel Schalit/APIsrael has approved the building of 277 homes in Ariel, defying criticism of continued construction on lands the Palestinians claim for a state.
The Palestinians accuse Ehud Barak of contempt for peace talks by giving approval for building of 277 homes in Ariel

The Israeli government has authorised the construction of 277 homes in the West Bank settlement of Ariel, a move that will diminish the prospects for a resumption of peace talks with the Palestinians.

An announcement from the defence ministry said approval for the scheme was given last week. The government also backed the building of 1,600 homes in the East Jerusalem settlement of Ramat Shlomo. Further announcements are expected in the coming days.

Ariel, home to almost 20,000 Israelis, extends 12 miles (20km) inside the West Bank. Its future under any agreement on borders with the Palestinians is uncertain.

Israel is determined to annex such a large settlement, but the Palestinians and many in the international community argue that it would cut the West Bank nearly in two, making a contiguous Palestinian state almost impossible.

The housing units had been in the planning process for several years before being approved by the defence minister, Ehud Barak. One hundred homes will be reserved for settlers evacuated from Gaza in 2005; the remainder will be sold on the open market.

The Palestinian Authority said the approval "makes clear to the world Israel's contempt for a negotiated two-state solution". Israel, it said in a statement, was "racing against time to make the two-state solution harder and harder by building on the land that is supposed to be the Palestinian state. The international community must ask Israel how it can pretend to be ready to negotiate while expanding Jewish settlements in the West Bank?"

Hagit Ofran of the Israeli organisation Peace Now, which monitors settlement activity, described the approval as a cynical move amid the current Israel-wide tent protests about the cost of renting and buying homes. "The government is taking advantage of the housing crisis in Israel to expand its settlement policy," she said. "Most Israelis are not settlers and don't want to be settlers, and construction in Ariel is not relevant to them."

A spokesman for the US embassy said unilateral actions by either side were "not helpful to the process to try to get both parties back to the table".

Israel appears to be stepping up approval of settlement construction before the Palestinians' bid for recognition of their state at the UN next month. The government is opposed to the Palestinians making a unilateral move, saying that only negotiations can bring about a Palestinian state within agreed borders.

Attempts by the US and EU to persuade the parties to resume talks have not been successful. The US wants the pre-1967 border between Israel and the West Bank to be the basis of negotiations, with agreed land swaps to compensate for Jewish settlements Israel would retain.

The Palestinians have identified continued settlement expansion as the main obstacle to resuming direct talks, which broke down last September after Israel refused to extend a temporary freeze on settlement construction.

It emerged this week that Israel's president, Shimon Peres, held a series of secret meetings with the Palestinian president, Mahmoud Abbas, in recent weeks. The talks were brought to an abrupt end when Peres was forced to cancel a meeting at short notice reportedly after the Israeli prime minister, Binyamin Netanyahu, refused to allow him room to negotiate.

Approximately 300,000 Israeli Jews live in settlements in the West Bank, which are illegal under international law. Another 200,000 live in settlements in East Jerusalem, which was captured by Israel in 1967 and later annexed in a move not recognised by the international community.