Israeli authorities have given preliminary approval to build 200 new illegal settler homes in east Jerusalem, in a move that threatened to push Israelis and Palestinians deeper into conflict after weeks of unrest over the city's holiest sites.

The announcement on Wednesday came hours before US Secretary of State John Kerry was scheduled to arrive in neighbouring Jordan on a mission aimed in part at restoring calm.

Brachie Sprung, a spokeswoman at the mayor's office, said city officials approved 200 settlement homes in the Ramot area. Sprung said it was just a preliminary stage of the planning process, meaning construction would be years away.

She also said city officials approved an additional 174 homes for construction in an Arab neighbourhood.

Much of the recent violence stemmed from tensions surrounding Jerusalem's hilltop complex that is revered by Muslims and Jews. The collapse of US-brokered peace talks, Israel's war last summer in the Gaza Strip against Hamas, and continued Israeli settlement construction in east Jerusalem have added to the distrust.

Washington 'deeply concerned'

About 200,000 Jewish Israelis live in settlement areas like Ramot that ring east Jerusalem to help cement Israeli control.

The Israeli announcement came before Kerry's scheduled meeting in Jordan with King Abdullah II and Palestinian President Mahmoud Abbas to discuss the situation in Jerusalem. There was no immediate plan for Kerry to travel to Israel.

US State Department spokeswoman Jen Psaki said that Washington was "deeply concerned" by the decision.

"These decisions to expand construction have the potential to exacerbate this difficult situation on the ground, and they will not contribute to efforts to reduce the tension," she added.

Under a longstanding arrangement, Jordan holds custodial rights over Muslim holy sites in Jerusalem, including the compound known to Jews as the Temple Mount and to Muslims as the Noble Sanctuary.

It is the third-holiest site in Islam and the most sacred place in Judaism. Jews are permitted to visit, but prayer by non-Muslims is banned.