ISRAEL is moving forward with plans for two major settlement projects in east Jerusalem, a spokeswoman says, even as a senior Palestinian official warned that his government could pursue war crimes charges if Israel doesn't halt such construction.
International anger over Israeli settlement construction has snowballed in recent days, following last week's UN recognition of a state of Palestine - in lands Israel occupied in 1967 - as a non-member observer in the General Assembly.
Israel retaliated for UN recognition of Palestine in the West Bank, Gaza and east Jerusalem by announcing plans to build 3000 homes for Jews in the West Bank and east Jerusalem, as well as preparations for construction of an especially sensitive project near Jerusalem, known as E-1.
The Israeli reprisal has prompted the country's strongest Western allies to take an unusually strong line with the Jewish state.
British Foreign Secretary William Hague warned on Tuesday that the latest Israeli building plans would make the establishment of a Palestinian state alongside Israel, with Jerusalem as a shared capital, "almost inconceivable."
Australia and Brazil summoned the local Israeli ambassadors on Tuesday in protest, Israel's Foreign Ministry said, a day after five European countries, including Britain, took the same step.
Israeli government spokesman Mark Regev defended the recent Israeli decisions, saying that "from our perspective, Israel is responding in a very measured way to a series of Palestinian provocations."
UN recognition could enable the Palestinians to gain access to the International Criminal Court (ICC) and seek war crimes charges against Israel for its construction of settlements on occupied lands.
Last week, Palestinian President Mahmoud Abbas said that he's not going to turn to the ICC "unless we were attacked" and that he informed many countries, including the United States, of this position. Abbas spoke before Israel announced its latest settlement plans.
A senior Abbas aide, Nabil Shaath, said late on Monday that "by continuing these war crimes of settlement activities on our lands and stealing our money, Israel is pushing and forcing us to go to the ICC."
Israel also said it is withholding some $US100 million ($A96.37 million) in tax rebates and other fees it collects on behalf of the Palestinians. The monthly transfer of the funds is vital for keeping afloat Abbas' Palestinian Authority, the self-rule government in the West Bank.
Israeli settlement construction lies at the heart of a four-year breakdown in peace talks, and was a major factor behind the Palestinians' UN statehood bid. Since 1967, half a million Israelis have settled in the West Bank and east Jerusalem.
Israel withdrew settlers and soldiers from Gaza in 2005, but continues to restrict access to the territory. It says the fate of settlements should be decided in negotiations and notes that previous rounds of talks continued while construction went on.
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