* Settlement population could rise by 10,000 in coming year
* Minister says homes already started will be completed
* Settlers attack West Bank mosque to "avenge" freeze
(Adds settler vandalism at West Bank mosque)
By Ori Lewis
JERUSALEM, Dec 11 The population of Jewish settlements in the West Bank could grow by 10,000 in the coming year despite a declared "freeze" on Israeli building in the occupied territory, an Israeli cabinet minister said.
The statement by Benny Begin, a rightist minister and member of Prime Minister Benjamin Netanyahu's Likud party, coincided with settler protests against the construction halt and a rare attack on a West Bank mosque by settler hardliners.
Begin told a conference in Tel Aviv on Thursday night that the settlement moratorium would be painful but was not a full construction "freeze" in the accepted sense of the word.
He noted that 3,000 homes already started would be completed regardless of the freeze, and said about 10,000 more settlers would move in, according to reports by Israel Radio and the Yedioth Ahronoth newspaper.
"This is neither a freeze nor a suspension," the paper quoted Begin as saying. "Construction in Judea and Samaria will continue in the next 10 months," he said, using the Biblical term for the West Bank.
"We are ... saying that we don't intend to restrict or suspend new building permits."
Government spokesman Mark Regev declined to commment on Begin's remarks and said that the declared freeze stood.
"There has been no change, the (freeze) stands and the cessation for 10 months stands," Regev said.
Netanyahu ordered a freeze on some settlement building three weeks ago, in what his government said was a gesture to Washington to help re-start peace talks with the Palestinians.
Palestinian leaders have refused to resume negotiations, saying the temporary moratorium did not go far enough.
Some Israeli settlers have denounced Netanyahu for betraying their trust, and several thousand held a protest demonstration in Jerusalem on Wednesday.
Palestinians in the West Bank village of Kufur Yasuf, near Nablus, said a gang of Jewish settlers forced their way into the local mosque on Thursday night, doused carpets and copies of the Koran with petrol, and set them ablaze.
Graffiti scrawled in Hebrew at the threshold said it was "the price-tag" -- an expression used by hardline settlers for systematic acts of vengeance against Palestinians.
The Israeli army issued a statement condemning the vandalism.
"From an initial investigation into the incident it appears that the suspects wrote hate-filled messages in Hebrew in addition to burning bookshelves and a carpet," it said.
The Israeli military "views the incident gravely and ... it will be dealt with accordingly by Israeli law enforcement agencies", the statement added.
Despite settler protests, some Israeli critics of Netanyahu's gesture have called the freeze a sham.
It applies to planned West Bank housing, but not to building planned for East Jerusalem -- whose annexation by Israel is not recognised internationally -- or to schools, synagogues and other community infrastructure in the settlements.
The measure was aimed at placating Israel's ally the United States. President Barack Obama began the year by demanding a total freeze on settlement activity but later relaxed his position and indicated a partial halt would be helpful.
Obama is pressing the Palestinians to resume peace talks.
Ideological divides run deep in Israel, especially over the future of some 500,000 Jews who live among 2.7 million Palestinians in the West Bank and East Jerusalem, areas captured in a 1967 war that Palestinians want for a viable future state. (Additional reporting by Abed Qusini and Atef Saad; Writing by Ori Lewis; Editing by Douglas Hamilton and Mark Trevelyan) (For blogs and links on Israeli politics and other Israeli and Palestinian news, go to blogs.reuters.com/axismundi)