The confirmation this week that a construction plan for east Jerusalem — for 20 Jewish homes in a prominently Arab area — received final municipal approval threw both the Obama administration and Netanyahu government for a loop.

The White House said it was seeking “clarification” on the announcement, while an aide to Benjamin Netanyahu insisted that the Israeli prime minister did not know about the announcement in advance.

The aide said that Netanyahu was caught off guard by the announcement, which was made minutes before his White House meeting with President Barack Obama on March 23.

The building permit for 20 housing units and a parking lot drew fierce condemnations from the leftist group Peace Now, which opposes Israeli settlement in the territories captured in 1967. Others accused the left of playing up news of the already-issued permits in order to torpedo Netanyahu’s visit to Washington.

Jerusalem city council member Yair Gabai (left) shows a map of an approved construction zone in east Jerusalem to Deputy Knesset Speaker Danny Danon (right) on March 10. photo/jta/flash 90/david vaaknin

White House spokesman Tommy Vietor said the Obama administration continues to believe that Israeli building in Jerusalem is destructive to the Mideast peace process. He wouldn’t say if Obama and Netanyahu discussed the specific project in their March 23 meetings at the White House.

The new permit reportedly is for the construction of 20 Jewish homes on the site of the old Shepherd Hotel, which was purchased for $1 million in 1985 by Irving Moskowitz, a Florida billionaire who has funded a number of housing projects in east Jerusalem.

Jerusalem city hall issued a statement March 24 pointing out that the plan for that site was approved in July 2009, at which time it received a great deal of media attention; however, its approval was contingent on the payment of certain fees, which were paid on March 15.

At that time, the local planning council’s approval became final, allowing construction to begin. The Shepherd Hotel is scheduled for demolition, according to Hagit Ofran of Peace Now’s Settlement Watch.

Later March 24, reports coming out of Israel indicated that all discussions over new construction in Jerusalem have been frozen. The Israeli Interior Ministry said in a statement that meetings of its regional planning and building committee have been postponed until a management committee to coordinate government ministries on the construction has been established.

In a related development, Jerusalem city hall announced March 23 a comprehensive plan for the center of east Jerusalem. The initiative will include an increase in the commercial and hotel zones in the area, as well as the addition of more than 100 housing units earmarked for Arabs.

A Palestinian leader charged that the plan is meant to compensate for new building in Jewish neighborhoods — such as the plans for 1,600 new apartments in Ramat Shlomo that were announced during Vice President Joe Biden’s recent visit to Israel.

Though the downtown program appeared to be aimed at improving the rundown eastern sector, captured by Israel in the 1967 Six-Day War, Palestinians have rejected it in the past because it appears to involve bulldozing large swaths of territory before building the planned hotels, commercial centers and apartment buildings. The area now is crowded with houses and an existing commercial center.

“This is an attempt by the municipality to bribe the Palestinian residents to accept building new houses in the area for Jews,” said Khatem Abdel-Qader, a Palestinian leader in Jerusalem. “This is unacceptable.”

Naomi Tsur, a deputy mayor Jerusalem in charge of development, said that city hall is relating to Jerusalem as an urban area, not a political issue.

The Jerusalem Post, Ynetnews, the Associated Press and JTA contributed to this report.