An Israeli government committee on Monday advanced plans for 500 settler homes in East Jerusalem, an official said, in the face of disapproval from the United States at construction on occupied Palestinian land.

The Interior Ministry panel's preliminary approval of the new homes for Ramat Shlomo, a neighborhood built on West Bank territory captured in the 1967 war and annexed to Jerusalem in a move not recognised abroad, was kept low profile in an apparent bid to avoid friction with Washington.

A week ago, Prime Minister Benjamin Netanyahu ordered plans for some 600 housing units for Ramat Shlomo and 400 others for Har Homa, another East Jerusalem neighborhood, to be advanced.

Palestinian officials have voiced alarm, echoed in the international community, over the settlements, viewing them as a main obstacle to founding the independent state they seek in the West Bank and Gaza Strip with East Jerusalem as its capital.

An Interior Ministry spokeswoman did not immediately confirm Monday's committee decision, details of which were relayed to Reuters by an Israeli official on condition of anonymity.

The official said Israel hoped to avoid publicity around the move, one in a series of logistical and legal stages before construction begins. The number of new homes planned for Ramat Shlomo had been reduced, the official said, because of environmental concerns.

In Washington, US State Department spokeswoman Jen Psaki said the reports contradicted the Israeli government's stated goal of a peace agreement.

"This flies in the face of that," Psaki told reporters at her daily briefing, saying the United States had seen reports of the planned construction but not any details.

"It is unfortunate for this to move forward given not just the view of the United States, but the view of many in the international community," she added.

The European Union asked Israel for clarifications about Netanyahu's promotion of the Har Homa and Ramat Shlomo projects.

Netanyahu, whose relations with US President Barack Obama have long been strained, also drew criticism from the White House earlier this month after some two dozen Jewish families moved into homes purchased in an Arab neighborhood of East Jerusalem where about 500 settlers already live.

Peace Now, an Israeli anti-settlement movement, has warned that moving forward with the Har Homa and Ramat Shlomo plans could further inflame tensions in East Jerusalem, the scene of daily confrontations between stone-throwing Palestinians and police in riot gear.

Israel regards all of Jerusalem as its "indivisible and eternal" capital, a claim not recognised internationally, and says Jews have the right to live anywhere in the city.

Some 500,000 Israelis have settled in the West Bank and East Jerusalem, among 2.4 million Palestinians. The World Court says settlements Israel has built there are illegal, a view Israel disputes.

(Reuters)