Israel to build new homes on occupied West Bank

JERUSALEM, June 14 (Reuters) - Israel has approved construction of 1,300 new homes in an area of the occupied West Bank that the Israeli government considers part of Jerusalem, an Israeli official said on Saturday.

The announcement, condemned by the Palestinians, came as U.S. Secretary of State Condoleezza Rice arrived in Israel to try to push for an Israeli-Palestinian peace deal by the end of this year.

Interior Ministry spokeswoman Sabine Hadad said the housing units, planned for the ultra-Orthodox area of Ramat Shlomo, were approved by the regional planning board as part of Jerusalem's housing master plan.

Hadad said plans to build on nearby lands, which are closer to the Palestinian village of Beit Hanina, were not approved.

Palestinian negotiator Saeb Erekat called the announcement part of "a systematic policy to destroy the peace process".

"The number one item on Rice's agenda should be to stop this destructive Israeli policy," Erekat said.

The 2003 peace "road map", reaffirmed by Israeli and Palestinian leaders at a conference hosted by Bush in November, requires a halt to all settlement activity on occupied land where Palestinians seek statehood.

Ramat Shlomo is located on land captured by Israel during the 1967 Middle East war. Israel incorporated the area into the municipal borders of Jerusalem in an act not recognised internationally.

Israeli Prime Minister Ehud Olmert, in keeping with the previous government's policy, has vowed to keep West Bank settlement blocs, including enclaves near Jerusalem, under any future peace accord.

Israel regards all of Jerusalem as its capital. Palestinians want East Jerusalem to be the capital of the state they hope to establish in the West Bank and Gaza Strip.

Rice called Jewish settlement building "a problem" on Saturday and said Israel had not done enough to ease restrictions on Palestinians in the occupied West Bank.

"Look, it's a problem and I think it's a problem that we're going to address with the Israelis," Rice said of recent Israeli settlement construction announcements as she flew to Tel Aviv on her sixth trip this year to try to advance Israeli-Palestinian peace talks.

Earlier this month, Housing Minister Zeev Boim instructed his office to publish a tender to build 763 housing units in Pisgat Zeev and 121 housing units at Har Homa, an area Palestinians refer to as Jabal Abu Ghneim.

Palestinians say settlement expansion around Jerusalem could cut off their access to the holy city and carve up the West Bank in a way that would deny them a contiguous state. (Reporting by Avida Landau; editing by Matthew Tostevin)