JERUSALEM, Israel - Israel is defending its decision to build some 700 new apartments in the eastern sector of the city, including the Jewish neighborhoods of Neve Yaakov, Har Homa and Pisgat Ze'ev.
According to Israeli officials, the U.S. knew of the plans well in advance of the Housing and Construction Ministry's announcement on Monday.
The White House, European Union and Palestinian officials blasted the decision, calling it is an obstacle to peacemaking.
"The United States opposes new Israeli construction in east Jerusalem," read a statement released by White House spokesman Robert Gibbs.
"The status of Jerusalem is a permanent status issue that must be resolved by the parties through negotiations and supported by the international community," Gibbs stated.
Sweden, which holds the rotating EU presidency, also condemned the building.
"Settlements on occupied land are illegal under international law," the statement read.
Israeli Prime Minister Binyamin Netanyahu announced a temporary freeze on new building in Jewish communities in Judea and Samaria (the West Bank) several weeks ago, aimed at bringing Palestinians back to the negotiating table.
Netanyahu's spokesman Mark Regev said this administration is showing more flexibility than previous governments on the issue of building, but Jerusalem is a separate case.
"At the moment we are undergoing for the first time ever a 10-month settlements' moratorium and this is to give confidence to the peace process, to make the peace process move forward. But we have always made a distinction between the West Bank and Jerusalem. Jerusalem is our capital and will remain as such," Regev told reporters. Click Play to hear his comments.
Palestinians want east Jerusalem as the capital of a future state, but Israel considers the entire city to be its God-given eternal capital.
In mid-November, the Obama administration raised similar objections to a tender issued for 900 housing units in the southern Jerusalem neighborhood of Gilo.
The Prime Minister's Office responded to the objections by reiterating that Gilo is an "integral part of Jerusalem."
"The Gilo neighborhood is an integral part of Jerusalem, just like Ramot Eshkol, Rehavia, French Hill and Pisgat Ze'ev," the statement read.
"There is broad national consensus on the matter. The construction in Gilo has been going on for decades, and there is nothing new in the current planning and construction procedures," the Prime Minister's Office stated.