NEW YORK — Arab states are seeking to limit Israel's participation in the United Nations' General Assembly because of its failure to halt controversial construction in southeastern Jerusalem.

A resolution, circulating this week in draft form, is expected to be introduced at an emergency session of the General Assembly called in the wake of a recent U.N. finding that Israel has continued building at Har Homa.

No date has been set for the session, which was requested by Egypt, but it is expected to come as early as next week.

In April, the General Assembly adopted a resolution that demanded a halt to the Har Homa construction and other building in the territories.

Har Homa is located in a part of Jerusalem to which Palestinians lay claim as the capital of their future state, but which Israel maintains is part of the municipality.

The resolution also called on the U.N. secretary-general to monitor the situation and report back to the member states.

Secretary-General Kofi Annan issued a report last week saying Israel had failed to stop construction. He called it "particularly serious" because of its effect on the Mideast peace process, which has been virtually frozen since construction began in March.

Israeli officials at the United Nations reacted by terming Annan's report "very biased and one-sided" in favor of the Palestinians and charging that Annan has "fomented an anti-Israel policy" at the United Nations.

"Of course we don't want to see the emergency session convened," said acting Israeli U.N. Ambassador David Peleg. "We believe there's political motivation" behind it.

It is intended "to pressure Israel and replace direct negotiations and internationalize the conflict" with the Palestinians, he said.

The proposed measure calls on U.N. members to bar the import of goods manufactured in the "Occupied Palestinian Territory, including Jerusalem," and to impose other economic sanctions on the settlements.

The draft states, "Normal participation by a member state in the workings of the General Assembly cannot be carried out while it simultaneously and systematically violates international law, the provisions of the charter of the United Nations and relevant United Nations resolutions."

Israel's Foreign Ministry Director General, Eitan Ben-Tzur, was reported to have said last week that the United States has not been as forthcoming this time around in its efforts to convince nations not to vote against Israel and to try to soften the resolution's language.

Until now, the United States has stood steadfastly by Israel in the face of repeated U.N. condemnations of Har Homa.

Eliahu Ben-Elissar, Israel's ambassador to the United States, said in a briefing at the JTA's New York headquarters Wednesday that he has been assured by U.S. officials that "the American position has not changed."

Ben-Elissar met earlier this week with Thomas Pickering, undersecretary of state for political affairs, on the issue and said U.S. officials are "not very happy" with the decision to reconvene the emergency session.

Spokesmen at the U.S. mission to the United Nations could not be reached for comment.

Ben-Elissar termed the U.N. initiative an effort by the Palestinians to "internationalize" the peace process and said "they'll be the only ones to suffer."

"We're going backward instead of forward," he added, emphasizing that bilateral negotiations were the basis of the Israeli-Palestinian accords.

Ben-Elissar, meanwhile, said the appointment of the new Israeli ambassador to the United Nations, Dore Gold, was expected to be confirmed by July 18.

In the absence of a permanent head of Israel's U.N. team, Israel' s Foreign Ministry is sending a senior diplomatic team headed by deputy director-general Yitzhak Leor to the United Nations for the impending conflict over Har Homa.