Israeli Prime Minister Mr Ariel Sharon has provoked outrage by insisting he would expand a large Jewish settlement near Jerusalem.
"I don't see construction in the E-1 area as a serious problem, Mr Sharon said yesterday, referring to West Bank settlement of Maale Adumim.
"We must link Jerusalem to Maale Adumim," he said about a corridor where Palestinians fear Israeli construction would cut them off from the eastern part of the holy city that they hope to make the capital of a future state.
Palestinian deputy prime minister Nabil Shaath
Israel claims all of Jerusalem for its undivided capital, a claim that is rejected by the international community, which also considers all settlements in Gaza and the West Bank, including East Jerusalem, as illegal under international law.
Building up Maale Adumim, on land Israel occupied in the 1967 Middle East war, is viewed by Mr Sharon as a way of safeguarding that claim.
"Sharon wants to withdraw from Gaza to impose his control on the West Bank, especially Jerusalem," Palestinian Deputy Prime Minister Nabil Shaath said, referring to Mr Sharon's remarks.
Mr Sharon spoke to a parliamentary committee a week before he meets George W. Bush at the US president's Texas ranch for their first face-to-face talks in a year.
Many Palestinians fear the Gaza evacuation is a ploy to trade the impoverished coastal strip where 8,500 settlers live for large swathes of the West Bank, where most of Israel's 240,000 settlers live.
US Secretary of State Condoleezza Rice, responding to news last month of Israel's intention to build 3,500 homes between Maale Adumim and Arab East Jerusalem, said settlement expansion was at odds with US policy and should come to a "full stop".
But Mr Sharon believes an extension of Israel's biggest settlement, home to 30,000 people, is in line with Mr Bush's assurance to him last year that the Jewish state could expect to keep some large settlement blocs under a final peace accord.
Israel has given no timeframe for the start of the project.