The European Union expressed concern on Tuesday over Israels plans to build hundreds of new homes in two Jewish settlements in the West Bank, saying such moves threaten peace efforts in the region.

"We are deeply disappointed about the approval by Israeli authorities of a tender for the construction," a spokeswoman for the EU's foreign policy chief, Catherine Ashton, said in a statement.

Open gallery view EU High Representative Catherine Ashton speaks in Vilnius July 1, 2011. Credit: Reuters

"These actions run counter to repeated efforts of the international community to achieving a peaceful solution to the conflict that will preserve Israel's security and realize the Palestinian's right to statehood," Maja Kocijancic said.

Israel announced on Monday plans to build homes in two Jewish settlements in the West Bank, prompting Palestinian Authority officials to say the move hardened their resolve to seek statehood recognition from the United Nations.

Israel's housing ministry linked the new construction to a nation-wide plan to lower housing prices that have skyrocketed in recent years and appease protesters demanding affordable living spaces.

Talks between Israel and the Palestinians hit a standstill last year after the PA pulled out of the negotiations in reaction to Israel's refusal to extend a moratorium on settlement activity.

Since then, the EU, together with Russia, the United States and the U.N., have tried to negotiate a new round of talks.

Despite these efforts, Palestinian President Mahmoud Abbas has refused to return to the negotiating table unless Israel completely freezes settlement activity. The PA leader has instead chosen to focus his attention on a unilateral bid for statehood recognition from the UN in September.

The EU, which is the largest international donor of aid to the Palestinians, says settlement activities in the West Bank are illegal under international law.