The ministry issued a statement Saturday saying it was in full support of a negotiated settlement to the Israeli-Palestinian conflict and regretted Israel's plan to build the housing units.
"Such steps must end as they are incompatible with the spirit of the process of negotiations between the parties and undermine the resolution of the conflict on the basis of a two-state peace vision," the ministry statement said.
Saeb Erekat, the chief negotiator for the Palestinian side, told the New York Times the Israeli decision was a direct assault on regional peace.
"They know very well that this destroys the peace process," he was quoted as saying Friday.
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