Israel's interior minister has given final authorisation to build 1,600 apartments in disputed east Jerusalem and will approve 2,700 more in days, officials said today.

Prime minister Benjamin Netanyahu's office knows the construction plans are moving ahead, interior ministry spokesman Roi Lachmanovich said. An earlier approval for the 1,600-apartment project badly embarrassed Mr Netanyahu and caused a diplomatic rift with Washington because it coincided with a visit to Israel by US vice-president Joe Biden.

Palestinians oppose all Israeli construction in east Jerusalem because it chips away at their hopes to establish the capital of a future state in the holy city.

The approval for the apartments could also create new problems for Washington, which is trying to persuade the Palestinians to abandon their statehood bid and enter into negotiations with Israel instead.

Frustrated by a nearly three-year impasse in talks with Israel, the Palestinians said they will turn to the UN in hopes of receiving even a symbolic endorsement for statehood by the UN General Assembly.

On Tuesday, Washington rebuked Israel for advancing separate plans to build 930 apartments in another neighbourhood of east Jerusalem.

Mr Netanyahu's spokesman Mark Regev had no immediate comment on the latest project's final approval.

Mr Lachmanovich said the new apartments are necessary to address a housing shortage in the city.

"There's always something pending," he said, when asked about the timing of the approvals.

Actual construction is unlikely to begin for a number of years because building plans will have to go through multiple approval processes.

Negotiations between the Palestinians and the Israelis have ground to a halt, with each side accusing the other of violating existing agreements and not acting in good faith.

The Palestinians refuse to negotiate with the Netanyahu government as long as it continues to build in the West Bank and east Jerusalem - territories that would form the core of their future independent state.

Israel rejects that demand, arguing that previous rounds of talks moved ahead in tandem with settlement construction.

Israel annexed east Jerusalem in 1967 after capturing it from Jordan and does not consider the Jewish neighbourhoods it has built there to be settlements.

The international community, however, does not recognise the annexation, and regards the Jewish construction there to be no different from the Jewish construction in West Bank settlements.