The Housing Ministry announced tenders for 1,500 new housing units in the West Bank and East Jerusalem on Wednesday night, a move termed by Minister Uri Ariel as a response to the new Palestinian unity cabinet.

According to the statement, tenders were released for 223 new apartments in Efrat, 484 housing units in Beitar Ilit, 38 units in Geva Binyamin (Adam), 76 in Ariel, 78 in Alfei Menashe, 155 in Givat Ze'ev, 55 of which in Agan Ha'ayalot, and 400 new units in the Ramat Shlomo neighborhood in East Jerusalem.

"I congratulate the decision to give a proper Zionist response to the establishment of the Palestinian terror cabinet," Minister Ariel said. "The right and duty of the State of Israel to build across the country to lower the housing prices is unquestionable, and I believe these tenders are just the beginning."

Justice Minister Tzipi Livni on Thursday slammed the construction decision as "another policy mistake that will only make it more difficult for us to rally world support against Hamas."

Livni added that the new construction was a "punishment that the people of Israel are getting because of the presence of Habayit Hayehudi in the government of Israel and not because of the presence of Hamas in the Palestinian government." Habayit Hayehudi ministers will take any excuse to build in the settlements, she added. "The construction is a punishment to the nation of Israel that wants peace, and not the Palestinians."

Meretz Chairwoman Zahava Gal-On termed the construction a "price tag activity of the Israeli government," likening it to right-wing protests against any freeze in settlement activity. "I urge the prime minister to stop the price tag activity of the Israeli government," she said. "The construction of 1,500 housing units is an unnecessary provocative policy, om response to the formation of the Palestinian unity government."

Opposition head and Labor Party Chairman Isaac Herzog, called the government's priorities "fundamentally flawed. Instead of investing the money in construction in the Negev, Galilee and low-income neighborhoods, [the government] is gouging Obama's eyes out and acting like diplomatic pyromaniacs."

Israel is in the midst of a diplomatic landslide, Herzog said, adding that Netanyahu and Lieberman must assume responsibility for the consequences. "The prime minister is gambling with the future of the state of Israel," he said.

A new Palestinian cabinet was sworn in on Monday, the culmination of a reconciliation deal between the long-estranged Palestinian movements, Fatah and Hamas, which control the West Bank and the Gaza Strip, respectively.

The reconciliation and new cabinet were met with scorn in Israel, but was internationally recognized despite Prime Minister Benjamin Netanyahu's calls against it.

At a meeting with settler leaders last week, Netanyahu said that though he is in support of construction in the West Bank and in East Jerusalem, there are "international constraints" against it.

The Israeli government decided Monday that no talks will be held with the new Palestinian cabinet. The ministers decided the new cabinet will be held responsible for any attack against Israel, both from the West Bank and from the Gaza Strip, including rocket fire. Though the government did not level any new sanctions against the Palestinians, it authorized the PM to do so. The ministers also decided to set up a team "to examine possible actions facing the new reality, and prepare for future diplomatic and security scenarios."

In the cabinet meeting, Economy Minister Naftali Bennett led the hardline and said Israel must announce it doesn't recognize the new Palestinian government and that it severs all ties with it. Justice Minister Tzipi Livni and Finance Minister Yair Lapid objected, saying Israel must retain at least some communication with the new government. Finally, Livni and Lapid's stance was accepted and it was agreed contact with some of the new Palestinian ministers can be maintained on a case-by-case basis and per the PM's approval. The cabinet also agreed not to cease security cooperation with the Palestinians.

During the meeting, Bennett and Minister Gilad Erdan raised the possibility of annexing parts of the settlement blocs. Defense Minister Moshe Ya'alon objected, saying this step should only be examined in response to Palestinian unilateral steps at UN recognition.

