Israeli plans to build 300 new homes in a West Bank settlement near Ramallah prove that Israel is trying to "sabotage" U.S. efforts to revive peace talks, a top Palestinian official said on Thursday.

"We condemn this new decision which is proof that the Israeli government wants to sabotage and ruin the U.S. administration's efforts to revive the peace process," Palestinian negotiator Saeb Erakat told Agence France Presse.

"This is a message to the American administration and a blow to the peace process," he said, pointing to the "intense" shuttle diplomacy being conducted by U.S. Secretary of State John Kerry to try to bring both sides back to negotiations.

"This aims to drag the region into violence instead of peace and stability," Erakat added.

His remarks came shortly after officials confirmed the defense ministry had given the go-ahead to build 296 housing units at Beit El, although Israel's chief negotiator sought to play down the impact of the decision.

"There is no need for this to become a pretext for drama or anger," Tzipi Livni told army radio, saying she had updated the Americans about the development.

"They listened and they understood and for the moment, there is no reaction."