Israel’s plans to build hundreds of new homes in Jewish West Bank settlements have put Prime Minister Benjamin Netanyahu at odds again with Washington and the Palestinians, without appeasing settlers furious over the government’s plan to dismantle an illegally built settler enclave.

On Wednesday, officials announced the government would build 850 apartments after Parliament, at Mr. Netanyahu’s urging, voted down a bill that would have legalised the Ulpana enclave and other settler outposts built illegally on privately held Palestinian land. The international community condemns settlement construction, and the Palestinians have refused to talk peace while Israel builds on land they claim for a future state.

Mr. Netanyahu, long a settlement champion, found himself in the politically difficult position of having to carry out a Supreme Court ruling ordering the 30 apartments in Ulpana destroyed by July 1, 2012. Knowing it would not stand up to the court’s scrutiny, he pressured coalition legislators on Wednesday to vote down a proposal by hardline members to legalise outposts built on privately held Palestinian land.

To blunt the blow to settlers, he vowed to build 300 more homes in the authorised settlement of Beit El, on whose outskirts Ulpana lies.

“Israel is a democracy that observes the law, and as Prime Minister I am obligated to preserve the law and preserve the settlements. And I say here that there is no contradiction between the two,” he said on Wednesday after the vote. Later, Construction Minister Ariel Attias announced that an additional 551 apartments would be built elsewhere in the West Bank.

“Thirty apartments will be evacuated, but 850 will be built instead,” said Mr. Attias in a statement. “Under the circumstances, this is a worthy solution.”

The Palestinians and Washington disagreed.

Senior Palestinian official Saeb Erekat denounced the new construction as a measure “that undermines all efforts to revive the peacemaking between the two sides.”

With 500,000 Israelis now living on land claimed by the Palestinians, they say their dream of gaining independence is growing ever more distant. Israel says negotiations must be conducted without preconditions.

In a sharply-worded statement, the U.S. accused Israel of hindering peace efforts with the newly announced settlement construction and appeared to question both sides’ declared commitments to peacemaking.

“We’re very clear that continued Israeli settlement activity in the West Bank undermines peace efforts,” U.S. State Department spokesman Mark Toner said. “We do not accept the legitimacy of continued Israeli settlement activity. ... It impedes progress on any kind of comprehensive settlement, and that’s ultimately what everyone here, most importantly both sides, both parties, want to see happen. Or at least that’s what they claim to want to see happen.”

Peace talks between Israel and the Palestinians broke down three years ago, and the Palestinians refuse to restart negotiations until Israel freezes settlement construction in the West Bank and east Jerusalem. The Palestinians claim both areas, captured by Israel in the 1967 Mideast war, for a future state, along with the Hamas-ruled Gaza Strip.

Settlers, meanwhile, vowed to resist the impending evacuation, though they stopped short of threatening violence.

Ulpana resident Reut Lehrer told Army Radio on Thursday that “there was a lot of anger” there at the government following the Parliament vote.

“People feel we have been abandoned,” she said.

Ulpana settlers met after the Parliament vote to discuss how to respond, but no decisions have been taken, she said. But Army Radio said fliers distributed at the outpost called for a “vigorous fight” and urged settlers and their supporters to turn out in large numbers to resist the “injustice.”

Settler leaders have promised to resist the evacuation order, though they say their opposition will be peaceful.

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