Israeli Interior Minister Eli Yishai authorized plans to build thousands of new housing units in disputed areas of Jerusalem, the ministry confirmed on Thursday.

The interior minister gave the final permit for the construction of 1,600 housing units in the northeastern neighborhood of Ramat Shlomo. Other plans approved by Yishai include the construction of 700 housing units in Pisgat Ze'ev and another 2,000 in Givat HaMatos, both of which are located on land that Israel seized during the 1967 war, local news site Ynet reported.

"The plans, which the minister signed over the weekend, emanate from the dire need to promote construction in Jerusalem, since construction in its center or older neighborhoods (within east Jerusalem) is no longer possible," an Interior Ministry spokesman told Xinhua.

The decision was made days before the United States officially condemned such construction as a stumbling block to efforts to renew the Israeli-Palestinian peace process.

The Palestinians have insisted that the peace talks, which was suspended one month after they were launched in Washington in September 2010, should be restarted only when Israel stops building in Jewish settlements in the West Bank as well as in east Jerusalem.

An Interior Ministry official, however, said Yishai's decision to approve the plans was "completely not political," dismissing claims that such construction is an Israeli attempt to encroach on Arab land.

"Jerusalem suffers from a severe shortage of land for construction, and these three neighborhoods can accommodate new housing," the official told Xinhua on condition of anonymity.

The decision was quickly condemned by the Palestinians. "The continuation of Israeli settlement activities is war crimes," said Saeb Erekat, who is a senior Palestinian peace negotiator and member of Fatah party's central committee.

Erekat said the new construction plans "seem to be the Israeli response to demands by the United States and the International Quartet to stop the settlement."

The Palestinians slate east Jerusalem as the capital of their future state, while Israel has vowed that the city would remain undivided.

Last week, the approval of 930 new housing units in Har Homa, an Israeli neighborhood in southeast Jerusalem adjacent to the Palestinian town of Bethlehem, was met with international condemnation.

The European Union's (EU) foreign policy chief Catherine Ashton and Saeb Erekat slammed the housing plan as "illegal" and called on Israel to immediately cease all settlement construction in east Jerusalem.

The United States said on Tuesday it is "deeply concerned" with the move and views it as detrimental to the peace process.

"We have raised this issue with the Israeli government and continue to make our position known. As we have said before, unilateral actions work against efforts to resume direct negotiations," the Ha'aretz newspaper quoted a statement issued by the U.S. State Department as saying.

The statement urged Israelis and Palestinians to "agree on an outcome that realizes the aspirations of both parties for Jerusalem and maintains its unique religious status."