Sharm el-Sheik, Egypt, Dec. 26 (UPI) -- Egyptian President Hosni Mubarak hosted Israeli officials in the resort town of Sharm el-Sheik to discuss border security issues and proposed housing activity.

Mubarak supported his Palestinian counterparts' demands that Israel halt the construction of 307 homes in East Jerusalem and the West Bank, saying the activity harmed the peace process between the Israelis and Palestinians, Haaretz said Wednesday.

"This settlement activity will hijack the only outcome of the Annapolis conference, which was the relaunching of peace negotiations," Mubarak's spokesman Suleiman Awad said at the meeting's end.

Israeli Defense Minister Ehud Barak and Egyptian intelligence chief Omar Suleiman also met to discuss rising tensions over Egypt's perceived inaction against weapons smuggling into Gaza that Palestinian Authority officials said are meant to support Hamas militants.

Israeli officials claim Egyptian security forces permit weapons smugglers to operate using cross-border tunnels in exchange for bribes and Israeli Foreign Affairs Minister Tzipi Livni said Monday that Egyptian security forces were doing a "terrible job," Ynetnews reported Wednesday.

Egypt's Foreign Affairs Minister Ahmed Abul Gheit countered Livni's claims, saying Livni should "concentrate on negotiation efforts with the Palestinians, instead of speaking randomly about issues she should not be dealing with if she is not fully aware of the situation."