JERUSALEM, March 9: Israel announced plans to build hundreds of new homes in a Jewish settlement in the occupied West Bank on Sunday in a move the Palestinians denounced as another blow to US-brokered peace talks.

The new building was announced three days after a Palestinian gunman killed eight students at a Jewish seminary in Jerusalem that was associated with the settler movement.

Israeli officials said they revived a plan to build a total of 750 homes in Givat Ze’ev, a settlement near Jerusalem.

Housing Ministry officials said 200 partially-constructed units would now be completed. Prime Minister Ehud Olmert authorised building another 330 new homes in the area, his spokesman, Mark Regev, said.

Housing ministry officials said the remaining homes would be built at a later date.

Seeking to assuage US and Palestinian demands for an end to Jewish settlement activity in the West Bank, Olmert ordered ministries to seek his approval before authorising new building outside the boundaries that Israel has drawn for Jerusalem.

Givat Ze’ev lies just outside those boundaries.

The peace talks, launched in November with the goal of reaching a statehood agreement before US President George Bush leaves office next January, have been stalled by disputes over Jewish settlement building and a deadly Israeli offensive in the Hamas-controlled Gaza Strip.

Israel Radio said the ultra-Orthodox Shas party, a key partner in Olmert’s coalition, had threatened to bolt the government unless the Givat Ze’ev construction was approved.

But a senior government official said the decision to authorise the construction was made before Thursday’s attack.

Regev said the construction plan dates back nearly a decade:

“This is not a new decision. This decision predates this government.”

But Regev added: “We have approved it. It is consistent with our policy of building within the large settlement blocs, which will remain in Israel in any final-status agreement.”

Palestinian negotiator Saeb Erekat condemned the decision.

“This will undermine the talks,” he said of the announcement, four days before a U.S. general was to convene the first meeting of a special committee to assess whether Israel and the Palestinians are meeting their commitments under the long-stalled peace “road map”.

The road map calls on Israel to halt all settlement activity and on the Palestinians to rein in militants.

EXISTING PLAN: Eran Sidis, a spokesman for Israeli Housing Minister Zeev Boim, said plans to build 750 housing units in Givat Ze’ev, some 8 km north of central Jerusalem, were initially approved in 1999 but suspended two years later after the start of a Palestinian uprising.

The current plan calls for completing construction of the existing 200 units as well as building the 330 approved on Sunday by Olmert, Sidis said.

The Housing Ministry plans to move forward with the final 220 units once existing units are sold.

Israel has said it intends to keep Givat Ze’ev, home to about 10,000 Israelis, along with several other major settlement blocs in the West Bank in any future peace agreement.

Olmert’s restrictions on building in West Bank settlements did not apply to areas Israel defines as part of Jerusalem, whose municipal boundaries it widened after capturing Arab East Jerusalem in the 1967 Middle East war. Israel’s annexation of East Jerusalem has not been recognised internationally.

The issue of settlement building is sensitive to both sides.

Olmert has come under fire from settler leaders for freezing construction in the West Bank outside the main settlement blocs.—Reuters