Israel issues tenders for new settler homes
Israel has advanced plans for 1,460 new homes in Jewish settlements in the occupied West Bank after the formation of a Palestinian unity government.
Housing Minister Uri Ariel said the move was a "fitting Zionist response" to the reconciliation between Fatah and Hamas but also "just the beginning".
Israel has insisted it will not work with a government backed by Hamas.
The Palestine Liberation Organisation (PLO) said it viewed the announcement of new tenders as a "grave violation".
Executive Committee member Hanan Ashrawi said it viewed the "latest escalation with the utmost seriousness" and would appeal to the UN Security Council and the General Assembly.
About 500,000 Jews live in more than 100 settlements built since Israel's 1967 occupation of the West Bank and East Jerusalem. The settlements are considered illegal under international law, though Israel disputes this.'Political mistake'
End Quote Lior Amichai Peace Now
The government's policy is moving us towards one state”
The Israeli housing ministry published tenders late on Wednesday for about 900 housing units in the West Bank and 560 in East Jerusalem. It represents the final government approval before construction can begin.
Mr Ariel said they were an "appropriate Zionist response to the Palestinian terror government".
"The right and obligation of the state of Israel to build across the country in order to reduce the price of housing is not in question, and I believe that these tenders were just the beginning," he added.
Justice Minister Tzipi Livni, who was Israel's chief negotiator at the direct peace talks with the Palestinians that collapsed in April, said the publication of tenders was a "political mistake" that would "only distance us from the ability to recruit the world against Hamas".
Lior Amichai, of the Israeli settlement watchdog Peace Now, said the move showed "the government's policy is moving us towards one state".
US ambassador Dan Shapiro told Israeli Army Radio that it opposed "settlement construction in the West Bank as well as announcements regarding such construction" and "would do so with or without this disputed case of a new Palestinian transitional government".
On Wednesday, US Secretary of State John Kerry rejected Israeli criticism of Washington's recognition of the cabinet of technocrats.
Israeli Prime Minister Benjamin Netanyahu said he was "deeply troubled" by the decision, but Mr Kerry insisted the ministers were not affiliated to Hamas and would be watched "very closely".
Hamas is considered a terrorist group by Israel and the US.
The Islamist group ousted forces loyal to Palestinian Authority (PA) President Mahmoud Abbas and his Fatah faction in Gaza during clashes in 2007, a year after winning the last parliamentary elections, and set up a rival government. That left the PA in charge only of parts of the West Bank.
On Thursday, police shut down banks in Gaza after a number of the 40,000 Hamas-affiliated civil servants and security personnel clashed with some of the 70,000 employed by the PA in the coastal territory, after the former did not receive any wages from the new unity administration.