A UN official has warned that Israel's plans for further settlements in East Jerusalem could ignite more violence and threaten the viability of the future Palestinian state.

UN political chief Jeffrey Feltman called on Israel on Wednesday "to rescind" its plan to build 1,000 new homes, which he said was in violation of the international law, and contrary to the two-state solution.

Feltman called on Israel to "abide by its commitment to the international law", while calling on Palestinian protesters to stop incitement of violence.

He urged both sides to commit to "meaningful negotiations".

He was speaking at a UN Security Council emergency session convened at the request of council member Jordan on behalf of the Palestinians.

Tensions have soared between Arabs and Jews over Israel's plans to build about 1,000 housing units in East Jerusalem, the part of the city the Palestinians demand for their future state.

On Monday, Prime Minister Benjamin Netanyahu's government said that it was advancing plans to build about 600 additional houses in Ramat Shlomo and 400 in Har Homa districts of East Jerusalem.

Israel has said all of Jerusalem will forever be its capital, citing historical, religious and security reasons.

But the international community, including the US, does not recognise Israel's annexation of the eastern sector of the contested city.

'Exacerbating conflict'

On Wednesday, Palestinian Authority representative to the UN, Riyad Mansour, told the Security Council meeting that Israel's "illegal" actions on settlement plans "are exacerbating the conflict and obstructing a peaceful solution".

"Israel, the occupying power, must be demanded to cease immediately and completely its illegal settlement activities throughout the occupied Palestinian Territory, including East Jerusalem," he said.

In response, Israel's ambassador to the UN, Ron Prosor denied that Israel is an occupier, adding that Jerusalem will "forever" belong to Israel while denying the existence of Jewish settlers.

He also said that Israel is doing everything possible to minimise tensions, and blamed Palestinians for provoking the Israeli police.

The UN meeting came as tension between the US and Israel escalated, after an unnamed official of US President Barack Obama's administration called Netanyahu a "chickenshit", attacking him over Israeli policy on settlement building in the occupied Palestinian territories.