The UN special coordinator for the Middle East peace process on Thursday reiterated the international community's view that settlements in occupied Palestinian territory are illegitimate.

In a statement, Robert Serry said that Israel's settlements were contrary to international law "whether on private Palestinian land or elsewhere in occupied Palestinian territory."

The latest announcements, including adding 300 units in Beit El, deep inside the occupied West Bank, are "deeply troubling," the statement from the special coordinator said.

He reiterated a recent warning to the Security Council that "if the parties do not grasp the current opportunity, they should realize the implication is not merely slowing progress toward a two-state solution. Instead, we could be moving down the path toward a one-state reality, which would also move us further away from regional peace in the spirit of the Arab Peace Initiative”.

Israel, meanwhile, shrugged off US criticism of the plan to erect 851 more settler homes, projects that appeared aimed at placating settlers angry with Prime Minister Benjamin Netanyahu.

"They need to condemn. We need to build," Construction and Housing Minister Ariel Attias told Army Radio.

Facing down settlers and their supporters in parliament and in his right-wing Likud party, Netanyahu defeated an attempt by ultranationalist lawmakers to "legalize" all settler homes on private Palestinian land in the West Bank.

The bill was proposed after the Supreme Court ordered the removal by July 1 of five apartment buildings erected on Palestinian tracts in the settlement of Beit El.

Netanyahu said he had no choice but to abide by the ruling, which put him at odds with an increasingly rebellious core of staunchly pro-settler activists and lawmakers in his party.

But he scrambled to soften the blow by promising shortly after the legislation was voted down to build 851 new homes in West Bank settlements.

Washington has repeatedly clashed with Israel over settlement expansion and was swift to voice its displeasure.

"We are very clear that continued Israeli settlement activity in the West Bank undermines peace efforts and contradicts Israeli commitments and obligations," US State Department spokesman Mark Toner said, in a refrain long familiar to Israeli leaders.

Held Back

US-sponsored peace talks broke down in 2010 in a row over settlements and Palestinian leaders say they will not return to the negotiating table until Israel halts all building on occupied Palestinian land. The World Court considers Jewish settlements, built on territory that Israel captured in a 1967 war, illegal.

Attias, in a Reuters interview, said the US criticism came as no surprise and "there would have been stronger condemnation" of Israel if the law to sanction the Beit El homes had passed.

"It's not as if we can build as much as we want to," he said. "We appreciate what the Americans ask from us, so we build a lot less than what is needed there. There is natural growth: people get married, they want to live near their parents, they want to expand their house."

Palestinian Authority spokesman Ghassan Khatib said the United States and other countries "must make a bigger effort to force Israel to abide by international law and put an end to Israeli settlements".

At Beit El, settlers set up protest tents outside the five dwellings that are to due to be lifted from their foundations and relocated to an adjacent military installation, in what is likely to be a complex engineering project.

"There is a lot of anger," Reut Lerer, one of the residents slated to move, told reporters.

"We feel abandoned. We are fighting for the Land of Israel. Demolishing homes here is an injustice ... We cannot let this pass quietly and we all feel there should be protests."

(Ma'an)