Joe Biden, the US vice-president, condemned a plan by Israel to build 1,600 homes on occupied Palestinian land in an East Jerusalem settlement.

The Israeli interior ministry's approval of the plan cast a cloud over a visit to the country by Biden just hours after he pledged strong support for the Israeli government.

In an unusually strong statement issued after he arrived 90 minutes late for a dinner with the Israeli prime minister, Benjamin Netanyahu, Biden said: "I condemn the decision by the government of Israel to advance planning for new housing units."

He said the blueprint for Ramat Shlomo, an ultra-Orthodox settlement in an area of the West Bank annexed to Jerusalem, "undermines the trust we need right now and runs counter to the constructive discussions I've had in Israel".

The approvals came just a day after the Israeli defence ministry announced that 112 apartments would be built in Beitar Illit, a settlement on the occupied West Bank. The new building comes at a delicate moment in the long-stalled peace process after Israeli and Palestinian leaders agreed to start indirect negotiations.

The interior ministry said the Ramat Shlomo approvals had been passed by the Jerusalem district planning committee. A spokeswoman said there were 60 days to appeal against the decision. Ramat Shlomo, built 15 years ago, is on land captured in the West Bank in 1967 and annexed to Israel in a move not recognised by the international community.

Israel's interior minister, Eli Yishai, who heads a religious party in Netanyahu's governing coalition, said the timing of the plan's approval was coincidental. "There was certainly no intention to provoke anyone and certainly not to come along and hurt the vice-president of the United States," Yishai told Israel's Channel One television.

"Final approval [for the project] will take another few months. I agree that the timing [of the announcement] should have been in another two or three weeks."

Two years ago, when the Israeli government approved 1,300 homes in the same settlement, then US secretary of state, Condoleezza Rice, criticised the move as having a "negative effect" on peace talks.

Saeb Erekat, the chief Palestinian negotiator, said the announcements were "destroying our efforts" in peace negotiations.

"With such an announcement, how can you build trust?" he said. "It's a disastrous situation."

Earlier in the day, Biden said Israel and the Palestinians needed to "take risks for peace". But his talk of a "moment of opportunity" obscures a reality in which the two sides are a long way apart. Although the peace process has been under way for nearly two decades, there have been no direct negotiations between Israeli and Palestinian leaders since Israel's war in Gaza a year ago.

Palestinian officials refused to hold direct talks unless Israel halted all settlement construction, in line with the demands of the US administration and of the US road map. But Netanyahu, agreed only to a temporary, partial curb to settlement building. It did not include East Jerusalem, or public buildings, or homes where construction had already started.

In talks with Netanyahu, Biden appeared to focus not on the struggling peace process but on Iran, saying Washington was committed to preventing Iran from obtaining nuclear weapons. "There is no space between the US and Israel when it comes to Israel's security," Biden said after their meeting.

"We are determined to prevent Iran from acquiring nuclear weapons," Biden said.

In private, he is also believed to have cautioned the Israeli government against any unilateral military strike on Iran, and to have tried to win Israeli support for the US administration's policy, which is moving towards sanctions against Iran.

Netanyahu made clear the Israeli government hoped for a tougher sanction regime against Iran. "The stronger those sanctions are, the more likely it will be that the Iranian regime will have to chose between advancing its nuclear programme and advancing the future of its own permanence," he said. Netanyahu frequently cites the need to address Iran's nuclear ambitions as his priority in government and Israeli leaders have pointedly not ruled out a military option.