Chief Palestinian negotiator Saeb Erekat welcomed the international criticism of Israel's plan to build hundreds of housing units in Jerusalem's southeastern Gilo neighborhood.
He said the Gilo project "provides 900 more reasons why hopes for salvaging the two-state solution and restarting genuine negotiations are rapidly fading, and why Israel is not a partner for peace."
The Palestinians claim the West Bank and east Jerusalem, areas captured by Israel in the 1967 Mideast war, for their hoped-for state and have refused negotiations until Israel stops settlement construction in these areas.
The Palestinians say the continued growth of settlements on land they claim will make it impossible for them to establish a viable country of their own.
The future of east Jerusalem is the most intractable issue in the Israeli-Palestinian conflict. The area includes Jerusalem's walled Old City, home to sensitive Jewish, Christian and Muslim holy sites. Israel annexed east Jerusalem immediately after the 1967 war and claims all of the city as its eternal capital.
"Israel is looking to bolster the settlements at the expense of a solution that includes the establishment of a Palestinian state," Erekat added.
Addressing the Israeli construction plans, US President Barack Obama told Fox News on Wednesday that such moves make it harder to achieve peace in the region and embitter the Palestinians in a way he said could be dangerous.
Erekat called the construction plans a "slap in the US' face" and a "provocation against the international community."
The EU, Russia, Britain and the UN also criticized the move, but French Foreign Minister Bernard Kouchner, who is visiting Israel, said the decision to build in Gilo was "not political" and "should not be an obstacle" to resuming peace talks.
Former Palestinian Prime Minister Ahmed Qureia, a member of the Palestinian Liberation Organization's Executive Committee, said the plan to build more housing units in Gilo was the "final nail in the peace process' coffin."
"This proves that the international community must realize that our statements regarding the collapse of the two-state solution are not slogans – they reflect reality – and the alternative is an eternal conflict that will lead the region and the entire world towards instability," he said.
Associated Press contributed to the report