Israeli Prime Minister Binyamin Netanyahu this week said Israel would continue with plans to settle parts of Jerusalem.
"Jerusalem is the eternal capital of Israel and the source of Zionism is in Zion," he was quoted by The Jerusalem Post as saying. The Israeli newspaper said it expects a planning committee to approve of 2,600 new units in the area.
British Foreign Secretary William Hague condemned the move as a violation of international law.
"It is deeply disappointing that despite the international community repeatedly raising our concerns, Israel continues to press ahead with plans to expand them (settlements)," Hague said in a statement.
The Palestinian Authority was upgraded at the U.N. General Assembly last month. Negotiators said the move would facilitate a stalled peace process in the Middle East. Israel announced plans for new settlements after the Palestinian measure passed, however.
Victoria Nuland, a spokeswoman for the U.S. State Department, said repeated announcements of Israeli settlement activity run counter to the peace process.
"Israel's leaders continually say that they support a path toward a two-state solution, yet these actions only put that goal further at risk," she said.