The Interior Ministry advanced plans for 900 new Jewish home units next to the Gilo neighborhood in east Jerusalem on Monday.
A ministry spokeswoman said the plans initially had been approved a year ago and that Monday?s authorizations were purely technical. She added that there were more bureaucratic steps in the process before building could begin.
Jerusalem City Councilor Elisha Peleg (Likud) said construction was years away but that Monday?s action was a significant step in the process.
Projects like this, he said, were important because the city desperately needed to increase its housing stock so that prices would become affordable and families would remain in the city.
The traditional phrase "rebuilt Jerusalem" is an empty slogan because there are almost no housing projects, Peleg said. He charged that Prime Minister Binyamin Netanyahu had politicized building in the city by tying it to the peace process.
Most of the time the projects are frozen, he said. Building is going forward now because Netanyahu gave it a green light, Peleg said.
City Councilor Pepe Alalu (Meretz) accused Netanyahu of trying to torpedo the peace process by allowing the project to move forward at this time.
Netanyahu has always insisted that all of Jerusalem remain in Israeli hands in any final status agreement with the Palestinians and that building will continue in the city.
The Palestinians in turn have insisted that Jewish building over the pre-1967 lines must be halted.
On Sunday, the Construction and Housing Ministry announced its intention to market 793 new homes in Jewish neighborhoods of east Jerusalem. Both announcements come in advance of the second round of direct talks with the Palestinians, scheduled for Wednesday in the city.