The construction of more than 1,200 new homes in Jewish settlements is to go ahead. The move is seen as a warning to the Palestinians over their bid to ask the UN to recognise Palestine as an independent state.

The Israeli government announced on Monday that it was accepting bids from contractors to build homes in two Jewish enclaves in East Jerusalem, Ramot and Pisgat Zeev. The homes are among 1,200 whose construction Israel ordered fast-tracked in November 2011 after a key UN body granted full membership to Palestine.

Officials indicated that the timing of the tenders was meant to signal to the Palestinians that they should consider the possible consequences of their plan to ask the UN General Assembly later this month to upgrade their status to non-member observer state.

Saeb Erekat, a senior Palestinian official, condemned the Israeli action and urged the US to pressure Israel to halt settlement construction.

"What you need to stop is not the Palestinian efforts at the UN," he said. "What you need to stop are these settlement activities that are destroying and undermining the possibility of a two-state solution."