Israel to approve 500 new settler homes

Israel's Prime Minister Benjamin Netanyahu (front R) arrives to the weekly cabinet meeting in Jerusalem September 6, 2009.

JERUSALEM (Reuters) - Israel will in the next few days approve construction of some 500 new settler homes in the occupied West Bank before a possible settlement freeze demanded by Washington, a defense ministry official said on Sunday.

"Approval will be given in the next few days for 450 to 500 housing units and the Americans know that," said the official, declining to be named. The defense ministry oversees approval of new constructions in West Bank settlements.

An aide to Prime Minister Benjamin Netanyahu disclosed this week the Israeli leader's intention to authorize the new projects before weighing a moratorium on new building permits.

Transport Minister Yisrael Katz held fast to the plan two days after the disclosure.

"The prime minister will decide in the coming days on the building of hundreds of additional housing units in order to solve existing problems in various settlements," Katz told Israel Radio.

Some 2,500 housing units are currently being built in West Bank settlements and Israeli officials said their construction would continue.

The settlement issue is a major obstacle in the stalled Israeli-Palestinian peace process and has opened the most serious rift in Israel's relations with the United States in a decade.

Netanyahu, who holds further talks on the settlement issue later this week with U.S. envoy George Mitchell, has resisted a total freeze stipulated by a U.S.-backed 2003 peace "road map" that also commits the Palestinians to reining in militants.

The Haaretz daily reported on its website that Netanyahu had told ministers of his own Likud party that he would finalize a deal on settlements with Washington during Mitchell's visit.

U.S. President Barack Obama has been putting pressure on Netanyahu to halt construction in settlements. Palestinian President Mahmoud Abbas has said peace talks -- suspended since December, and which Washington seeks to restart -- cannot resume without a freeze.

TALKS PLANNED

The White House voiced regret on Friday over the new building plan and said such Israeli actions made it harder to create a climate for negotiations.

But a U.S. official in Washington said the Obama administration believed it was still possible to reach a deal to resume overall peace talks.

A settlement deal could lead to talks at the U.N. General Assembly this month involving Obama, Netanyahu and Abbas.

In what appeared to be a softening of his position, Abbas said on Saturday he was open to meeting Netanyahu if they discussed "a clear vision with regard to settlements."

Netanyahu did not address the settlement issue in his broadcast remarks at an Israeli cabinet meeting on Sunday.

But National Infrastructure Minister Uzi Landau, using Israel's terms for the West Bank, told reporters: "I don't see any reason to stop construction ... in Judea and Samaria."

Some 300,000 Israelis live in the West Bank and another 200,000 in Arab East Jerusalem, territory captured in a 1967 war. Some 2.5 million Palestinians reside in the West Bank and aspire to establish a state there and in the Gaza Strip.

Political analysts said Netanyahu's intention to approve new building permits before suspending construction starts was designed to avoid a crisis within his right-leaning government over settlements, while reducing friction with Obama.

As part of any construction freeze, Netanyahu and Obama have been seeking initial steps by Arab countries to normalize relations with Israel, but Washington has met resistance in the region over who should make the first move.

(Additional reporting by Joseph Nasr; Editing by Mark Trevelyan)