The Arab League sent letters to world leaders on Sunday calling for a boycott of this week's international tourism conference in Jerusalem hosted by Israel.

Assistant Secretary General Mohamed Sobeih said the Arab League "urged all countries to boycott the conference" in light of continued Israeli settlement construction in the West Bank.

Open gallery view Arab foreign ministers and delegations attending a meeting of the Arab League in Cairo on July 29, 2010. Credit: AP

The Arab League's call for a boycott of the Organization for Economic Cooperation and Development's conference, set to start Wednesday, comes after Turkey, Britain and Spain said they would not attend.

Arab states and the Palestinians have long eyed East Jerusalem as the future capital of a Palestinian state and there was concern that participating in the conference would give recognition to Israel's claim of Jerusalem as its capital.

The call comes just two days after Israel issued 238 new housing units in East Jerusalem, which was described by Egypt and the Gulf leaders as a provocative step.

There were renewed worries that the move to build more Jewish homes in East Jerusalem would further jeopardize the uncertain resumption of direct Israeli-Palestinian talks, which were re-launched in Washington last month.

Israel, which has nearly 500,000 settlers in the West Bank and East Jerusalem, has been criticized by world leaders for its refusal to extend a 10-month moratorium on settlement building that expired September 26.

Since then, the Palestinians and their Arab supporters have been contemplating turning to the United Nations for recognition of their right to a Palestinian state.