Meanwhile, Israeli “Defense” Minister Shaul Mofaz has approved the construction of new settler homes in the Israeli colonial settlements of Bracha, Nokdim, Ariel (40 homes) and Maaleh Adumim (200 homes), Israel's largest settlement a few kilometers to the east of occupied Jerusalem.

In addition, Mofaz agreed to advance construction plans in the settlements of Givat Zeev and Beitar Illit, two large settlements near Jerusalem.

Most of the new homes will be built in settlement blocs that Israeli Prime Minister Ariel Sharon vowed to keep under any final peace agreement with the Palestinians, reported CBS News correspondent Robert Berger.

Mofaz made the decision shortly before leaving the Likud Party for Sharon's new party, Kadima. The Yediot Ahronot daily said Mofaz initially approved the housing to shore up support within Likud. Trailing badly in Likud polls, Mofaz decided instead to join Kadima.

Palestinian negotiator Saeb Erakat said the new construction “undermines the vision of a two-state solution.”

“This is a clear-cut violation of the road map ... and I really hope that President Bush will personally take note of that,” he said.

Erakat was referring to the Quartet-drafted and UN-adopted “roadmap” peace plan.

An Israeli “defense” ministry spokeswoman confirmed Wednesday that Mofaz authorized the construction of 200 housing units “within the municipal boundaries” of Ma’aleh Adumim.

Asked for comment, US Embassy spokesman Stewart Tuttle reiterated Washington's position that Israel must “stop the settlement expansion in addition to removing illegal outposts.”

The future of Jerusalem is one of the most contentious issues for the Palestinians, who insist that eastern Jerusalem must be the capital of a future Palestinian state. Since it occupied then annexed the Holy City in 1967, Israel has attempted to cut off eastern Jerusalem from the rest of the West Bank by building settlements inside and around it.

Eastern Jerusalem is being further divided by the Apartheid Wall Israel is building on occupied Palestinian land, which threads through the city's Palestinian communities.