Israel announced plans on Monday to build another 294 homes in two Jewish settlements in the West Bank, and the Palestinians said the move hardened their resolve to seek statehood recognition from the United Nations.

Israel's Housing Ministry linked the new construction to a nationwide plan to lower housing prices, which have skyrocketed in recent years, and appease protesters demanding affordable living space.

Open gallery view The Israeli settlement of Beitar Illit, south of Jerusalem. Credit: Tess Scheflan

The tenders seek builders for the projected expansion of the Beitar Illit enclave outside Jerusalem and Karnei Shomron, a settlement on the outskirts of the West Bank's largest Palestinian city of Nablus.

Ariel Rosenberg, a ministry spokesman, said it could take as long as two to three years before the homes were built, adding that the tenders were the first issued for occupied areas beyond Jerusalem since a building freeze expired in September.

Prime Minister Benjamin Netanyahu in November 2009 had ordered a 10-month temporary halt to new settlement-building on territory Israel captured in a 1967 war. He declined U.S. appeals to extend the moratorium late last year.

Palestinian President Mahmoud Abbas has refused to hold peace talks with Israel unless it completely freezes settlement activity. He has instead focused efforts on a unilateral bid for statehood recognition from the United Nations in September.

"This decision is another reason calling on us to go to the United Nations and the Security Council to ask for recognition of the state of Palestine and gaining full membership for it in the United Nations," Nabil Abu Rdainah, an Abbas spokesman, said in a statement.

Hagit Ofran, a spokeswoman for Israel's settlements watchdog group Peace Now, charged that the new construction plans "show the public the Israeli government isn't moving toward peace."

Rosenberg said the new construction was part of a wider plan to build another 7,000 homes across Israel, releasing his statement as hundreds of protesters pitched tents in the business hub of Tel Aviv to demand more affordable housing.

"The ministry is constantly seeking to market land to cope with a housing shortage," Rosenberg said.

In contrast with the United States and Europe, Israeli housing prices have soared by an average of 50 percent in the last three years, an issue

Netanyahu has said he would address by efforts to cut red tape he says often hinders new construction.

