WASHINGTON (Reuters) - The U.S. State Department said on Wednesday it was "deeply concerned" about an Israeli government decision to build 300 new homes in a Jewish settlement in the occupied West Bank and hundreds of homes in East Jerusalem.

"The United States continues to view settlements as illegitimate and we strongly oppose steps to advance construction in the West Bank and East Jerusalem," State Department deputy spokesman Mark Toner said in a statement.

"Settlement expansion threatens the two-state solution and calls into question Israel's commitment to a negotiated resolution to the conflict," he said.

(Reporting by Eric Beech; Editing by Sandra Maler)