* Israel's Barak goes to U.S. to try to narrow rift

* New units part of wider construction plan for settlement

(Adds Abbas comments, paragraph 8-11, background)

JERUSALEM, June 29 (Reuters) - Israel's Defence Ministry said on Monday it had approved construction of 50 new homes at a West Bank settlement as part of a plan for 1,450 housing units, an expansion that defies a U.S. call for a settlement freeze.

News of the planned building work emerged hours before Defence Minister Ehud Barak was due to travel to the United States for talks aimed at narrowing a rift with Washington over the settlement issue.

He will meet President Barack Obama's Middle East envoy, George Mitchell.

An affidavit submitted by the Defence Ministry to the Supreme Court outlined plans to relocate settlers from Migron, an outpost built in the West Bank without Israeli government permission, to the settlement of Adam, north of Jerusalem.

According to the document, a response to a court case brought by the Israeli anti-settlement group Peace Now, a master plan for Adam calls for construction of 1,450 homes there.

But the ministry said it had given the go-ahead for the construction of only 50 of the dwellings and any additional units would require its separate approval.

Peace Now said some 2,500 settlement homes are currently under construction in the West Bank. Obama has pressed Israel to halt settlement activity as part of a bid to revive peace talks under which the Palestinians would gain statehood.

Some 500,000 Israelis live in the West Bank and Arab East Jerusalem, territory Israel captured in a 1967 war. Palestinians say settlements, deemed illegal by the World Court, could deny them a viable and contiguous state.

STATEHOOD

In the West Bank city of Ramallah, Palestinian President Mahmoud Abbas reiterated his refusal to resume negotiations with Israel until it froze settlement.

"We won't accept the continuation of settlements," Abbas said.

Abbas also urged Israeli Prime Minister Benjamin Netanyahu to drop his conditions for the creation of a Palestinian state, which include international guarantees it would have no army and a demand Palestinians recognise Israel as a Jewish state.

"Israel should accept the two-state vision and not put conditions that would render the issue meaningless," Abbas said, echoing comments he made through a spokesman after a Netanyahu policy address on June 14.

In a rare dispute between Israel and its main ally, the United States, Netanyahu has refused to declare a settlement freeze, saying that some construction should continue to match population growth within the enclaves.

Barak left open the possibility of a limited, temporary halt to construction in settlements, in remarks on Sunday in response to an Israeli newspaper report that he would propose a three-month moratorium. (Additional reporting by Mohammed Assadi in Ramallah; Editing by Samia Nakhoul)