Israel today risked provoking fresh US anger when a plan to build 800 homes in the West Bank settlement of Ariel was disclosed hours after the Obama administration expressed "deep disappointment" at approval for more than 1,300 Jewish homes in East Jerusalem.

The plan for the homes, in an area of Ariel close to the Palestinian town of Salfit, was reported to be at an advanced stage, needing only the approval of the local planning and building committee.

The disclosure drew a furious reaction from the Palestinians, who said it was time for the international community to immediately recognise a Palestinian state on the pre-occupation 1967 borders.

Saeb Erekat, the Palestinians' chief negotiator, said: "Once more, at the moment when we expected Prime Minister Netanyahu to announce a full settlement freeze ... he has sent Palestinians and the US administration a clear message that Israel chooses settlements, not peace."

The Ariel and East Jerusalem proposals came six weeks after the end of a 10-month partial freeze on settlement construction.

Since then, fledgling direct talks between Israel and the Palestinians have been on hold while the US tries to broker an extension to the freeze.

The Palestinians have said they will end negotiations without a further moratorium – but the Israeli prime minister, Binyamin Netanyahu, has so far not ceded to US pressure.

Netanyahu, who is in the US, will meet the secretary of state, Hillary Clinton, on Thursday. She is expected to press further for Israel to extend the freeze to prevent the collapse of the talks.

Following the disclosure of plans to build more than 1,300 homes in Jewish settlements in East Jerusalem, Catherine Ashton, the EU's foreign policy chief, said the plan "contradicts the efforts by the international community to resume direct negotiations, and the decision should be reversed".

Settlements threatened to make a two-state solution impossible, she added today. "The European Union will not recognise any changes to the pre-1967 borders, including Jerusalem, other than those agreed by the parties," she said.

Speaking in Indonesia, the US president, Barack Obama, said: "This kind of activity is never helpful when it comes to peace negotiations."

The US state department spokesman PJ Crowley said yesterday: "We were deeply disappointed by the announcement of advance planning for new housing units in sensitive areas of East Jerusalem. It is counterproductive to our efforts to resume direct negotiations between the parties."

Ban Ki-moon, the UN secretary general, also expressed displeasure over the proposal at a meeting with Netanyahu in New York.

In a statement, Ban said he was concerned at "plans for further settlements and plans to build more Jewish settlements in east Jerusalem", adding that it was "vital to break the current diplomatic stalemate, resume negotiations and produce results".

The East Jerusalem plans cover almost 980 new homes in Har Homa, 320 in Ramot and 32 in Psgat Ze'ev, all situated on the Palestinian side of the Green Line.

"This is a huge provocation by Netanyahu at a very sensitive time in the negotiation process," Hagit Ofran of Peace Now, an Israeli advocacy group monitoring settlement activity, said.

"The timing ... is not accidental. Without the intervention of the government, the settlers will take the opportunity to promote every [construction] plan they can."

US frustration at Israeli foot-dragging on a fresh settlement freeze is mounting. Some diplomats fear Israel is stalling for long enough to get a substantial number of construction "starts" under way, which would then be exempt from any new moratorium.

A spokeswoman for Ariel refused to confirm or deny the plan to build more homes in the settlement. However, the mayor, Ron Nachman, reportedly told the city council last month that the housing plan was "a very big thing".

He also said construction had resumed in other areas of the city, including the large industrial zone.

Ariel, home to almost 20,000 settlers, juts deep into the West Bank. Israel wants it to remain on its side of any border resulting from peace negotiations with the Palestinians. The Palestinians say it would jeopardise the territorial contiguity of a future state.

The US has given no guarantees to Israel on the future of Ariel under any peace deal, and some senior Israeli politicians admit it is in question.

Earlier this year, Netanyahu visited Ariel to plant trees in the settlement. "We want to strengthen the peace and co-existence with our neighbours – but this will not stop us from continuing with our lives here, where we'll continue to plant trees and to build," he said.

"Ariel ... will be an integral, inseparable part of the state of Israel in any future arrangement."

All settlements on occupied territory are illegal under international law. Israel's annexation of East Jerusalem is not recognised by the international community.