Israel's housing ministry says Prime Minister Ehud Olmert has approved building about 750 new homes in a Jewish settlement in the occupied West Bank.
The ministry said Sunday the construction in the settlement near Jerusalem in Givat Ze'ev was initially approved in 1999, but the project has been delayed repeatedly.
Palestinian negotiator Saeb Erekat condemned the Israeli building plan and accused Israel of trying to sabotage recently revived peace talks. The international "road map" for peace between Israel and the Palestinians calls on Israel to freeze all settlement activity.
Palestinians want Israel to stop all construction in the West Bank. Israel has said Givat Ze'ev is one of several major West Bank settlements it intends to keep in a peace deal.
Israel Radio says a key member of Prime Minister Olmert's coalition, the Shas Party, had threatened to quit unless he authorized the building plan.
Israeli settlement activity and Palestinian terrorist attacks are among the reasons peace talks relaunched last November have made little progress.
Israeli and Palestinian officials have said they plan to resume the talks, despite a recent Israeli offensive against militants in the Gaza Strip and a Palestinian shooting attack at a Jewish seminary in Jerusalem.
Pope Benedict said Sunday that violence and horror have, in his words, "bloodied" the Holy Land in recent days, feeding what he terms an "endless spiral of destruction and death". He urged Israeli and Palestinian leaders to continue negotiations aimed at building a peaceful and just future for their people.