Plans are under way to build 2,610 new homes in Givat Hamatos, a diplomatically sensitive area of east Jerusalem, which Palestinians believe should be part of their future state.
The Jerusalem Municipality approved the project in December 2012 but waited almost two years, until Wednesday, September 24, to place news of the approval in a local paper, according to Peace Now.
Building, however, can occur only once the municipality publishes tenders for the project, which is located near the Jewish neighborhood of Har Homa, which is opposed by the Palestinians.
Peace Now, which opposes building over the pre-1967 lines, posted information about the Givat Hamatos building project on its website Wednesday afternoon, just a few hours before Prime Minister Binyamin Netanyahu and US President Barack Obama were scheduled to meet in the White House.
Netanyahu has always insisted that Israel has a right to build in its capital.
The US, however, frowns on Jewish building in east Jerusalem and the West Bank, and the issue is one of the sources of tension between the two countries.
The municipality said that the project was designed so that half of the homes were for Jewish residents of the city and half for Arab residents.
The municipality spokesman noted that the plan was not a new one and that the publication of the approval was simply a "technical" step.
"New building is essential for the city's development for all the sectors. Building expands the city's stock of affordable homes so that it can attract young couples, students and other groups that will help the city flower and contribute to it culturally," the spokesman said.
But Hagit Ofran of Peace Now said that she didn't believe homes had been set aside for Arab residents of the city.
"It's just talk," she said. "They said the same thing about Har Homa during the planning phase," Ofran added. Lior Amihai of Peace Now said that the new neighborhood, located between Gilo and the industrial area of Talpiot, helped create a residential Jewish wedge between Jerusalem and the nearby Palestinian city of Bethlehem.
In a statement to the media, Peace Now said that "Givat Hamatos is destructive to the two-state solution."
It warned that it "divides the potential Palestinian state and blocks the possibility to connect the Palestinian neighborhoods in south Jerusalem with the future Palestinian state.
"Netanyahu continues his policy to destroy the possibility of a two-state solution. He is doing so in the West Bank, and he is doing so in east Jerusalem," it said.