The New Nation - Internet Edition

AP, Jerusalem

Israel announced plans Tuesday to build more than 300 new homes in a disputed east Jerusalem neighborhood, drawing quick Palestinian condemnation that the move will undermine newly revived peace talks.

The new housing would expand Har Homa, a Jewish neighborhood in an area Palestinians claim as capital of a future state. Palestinian officials appealed to the U.S. to block the project, but Israel says a pledge to halt settlement activity does not apply anywhere in the holy city.

The plan focuses attention on one of the most difficult issues facing Israeli and Palestinian negotiators in peace talks that are supposed to resume this month - the future of Jerusalem.

Channel 2 TV reported, meanwhile, that President Bush will visit Israel next month for the first time in his presidency. The report said he would focus on Israel-Palestinian peace talks and Iran's nuclear program. White House officials and the U.S. Embassy would neither confirm nor deny the report. Other Israeli media outlets reported the Bush visit would take place Jan. 9.