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Israel has told the United States that it plans to build new homes in illegal settlements at the end of June, an Israeli official reportedly said on Monday.

The official  The Times of Israel that the housing units "would be in the thousands".

News website Axios initially reported that Israel had told the US of plans for new settlement homes, and said soon-to-be announced plans would include at least 4,000 homes.

The US has voiced concerns over the project, saying it could negatively affect talks with the Palestinians.

The US "has been clear that advancing settlements is an obstacle to peace and the achievement of a two-state solution," Reuters on Monday reported a White House National Security Council spokesperson as saying.

Reports last week said Israel's Civil Administration was to discuss the launch of the E1 settlement project which, if implemented, would effectively cut the occupied West Bank in half.

The highly controversial and illegal E1 settlement scheme envisions the construction of thousands of housing units for Israeli settlers which will link Jerusalem to the Ma'ale Adumim settlement northeast of the city.

How far-right Israeli minister Bezalel Smotrich's plan for the West Bank actualises a second Nakba ⬇

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It would be the last link in a chain of Israeli settlements separating East Jerusalem from the rest of the West Bank.

But it was put on hold after pressure from Washington.

President Joe Biden’s administration worked for weeks to delay the E1 project, The Times of Israel reported, quoting US officials.

Prime Minister Benjamin Netanyahu’s far-right government has vowed to continue settlement building despite condemnation from the international community.

The Israeli group Peace Now said Netanyahu was taking these steps to appease settler leaders in the West Bank who are allies of Finance Minister Bezalel Smotrich, leader of the extreme-right Religious Zionism Party.

Last month, Israel allowed settlers to move back into the Homesh outpost near the town of Nablus in the West Bank.

Homesh, which sits atop the Burqa hill, was evacuated in 2005.

In March, the Knesset passed a law repealing the 2005 ban on Israelis residing in Homesh and three other settlements in the northern West Bank, and a military order was issued implementing the legislation.