A top White House official says Israel's plan to build more homes in disputed East Jerusalem appears to be a calculated effort to undermine the Middle East peace process.
U.S. presidential advisor David Axelrod said Sunday Israel's plan was an "insult," and said it was distressing to everyone promoting the ideas of peace and security.
Israel sparked the dispute last week by announcing it will build 1,600 new housing units in East Jerusalem, which its troops captured during the 1967 Arab-Israeli war. The Palestinians want East Jerusalem as the capital of a Palestinian state.
Israel announced its plans during a visit by U.S. Vice President Joe Biden, just after the Palestinians agreed to indirect talks with Israel.
Palestinian President Mahmoud Abbas has demanded Israeli freeze all settlement activity before peace talks can resume.
Israeli Prime Minister Benjamin Netanyahu told his Cabinet Sunday to not get carried away about the dispute. He said his government is dealing with the issue seriously.