Israel's latest announcement of more than 900 new illegal settlement units in occupied East Jerusalem "threatens" talks with the Palestinians, a senior Palestinian official has said.

The units in Gilo, near the Palestinian town of Beit Jala, are in addition to the 1,200 settlement homes approved by Israel on Sunday.

"This settlement expansion is unprecedented," said Yasser Abed Rabbo, a senior member of the Palestine Liberation Organisation, said on Tuesday. "It threatens to make talks fail even before they've started."

Settlement expansion goes against the US administration's pledges and threatens to cause the negotiations' collapse Yasser Abed Rabbo, senior Palestinian official

But on Monday, US Secretary of State John Kerry said that the recent flap over illegal settlement announcements likely would not derail talks, which are scheduled to resume this week.

Kerry, on a trip to Colombia, sought to neutralise the atmosphere in the Middle East, noting that the settlement plans were "to some degree expected," and calling for both sides to resolve their major issues.

"We have known that there was going to be a continuation of some building in certain places, and I think the Palestinians understand that," the chief US diplomat said in Bogota.

Palestinians denounced the settlement plan, which both Washington and the European Union said was illegal and detrimental to peace efforts.

The secretary of state urged Palestinians "not to react adversely" to Israel's announcement of new illegal settlement buildings, stressing the need to return to the negotiating table.

The last talks in 2010 broke down on the issue of settlements, which are illegal under international law.

But Kerry added: "I think one of the announcements or maybe one of them was outside of that level of expectation, and that's being discussed right now."

Security and borders first

Kerry, who took the lead in securing last month's resumption of talks, said he did not expect the latest developments to become a "speed bump", but he reiterated that the US regarded all settlements as illegitimate.

He said he had spoken with Israeli negotiator Tzipi Livni and had called Israeli Prime Minister Benjamin Netanyahu.

"What this underscores, actually, is the importance of getting to the table... quickly, and resolving the questions with respect to settlements, which are best resolved by solving the problem of security and borders," Kerry told reporters.

"Once you have security and borders solved, you have resolved the question of settlements. And so I urge all the parties not to react adversely or to provoke adversely, whichever party may do one or the other in any way," he said.

Russia described the Israeli move as "a counterproductive step that complicates the atmosphere of the talks".

But a spokesman for Netanyahu insisted that the new settlement units were "in areas that will remain part of Israel in any possible future peace agreement."

"It changes nothing," Mark Regev added.