Israel gave the go-ahead for two major housing projects on land where Palestinians seek a state.

Prime Minister Ehud Olmert this week approved the construction of 600 new homes in Pisgat Ze’ev, a neighborhood in the eastern part of Jerusalem that Palestinians deem a settlement.

Separately, the religious Shas party said it had received an understanding from Olmert that he would lift a freeze on the sale of 800 new homes in the settlement of Beitar Illit, which caters to Orthodox families. The government also gave its permission for new residential units to be built in Beitar Illit.

Israel argues that eastern Jerusalem, having been annexed as part of the capital, is exempt from the U.S.-sponsored peace plan’s conditions and that the Jewish state will keep major West Bank settlement blocs — including Beitar Illit — under any peace deal.

“We are not building new settlements and are not appropriating land for new settlements, but Beitar Illit, for example, is not a new settlement,” Olmert told his Kadima Party faction. “Everyone should understand this, and these things have never been hidden. They are part of the negotiations, which will continue to move forward.”

According to a recent Peace Now report, Jewish construction throughout the West Bank and Jerusalem has increased since the Annapolis peace parley in November 2007.

Though Israel promised to freeze construction in the settlements at the conference, the left-wing organization said in its report released March 31 that the construction has continued and increased.

Construction has taken place in 101 settlements, excluding East Jerusalem, in the past four months, according to the report. About 275 new buildings were started since Annapolis, with 20 percent of the construction taking place east of the national security barrier. — jta