"This demand to forbid Jews from building in east Jerusalem is totally unreasonable," Lieberman said at a joint news conference with visiting EU foreign policy chief Catherine Ashton.

"I think that this demand, it comes, in many ways, as an opportunity for the international community to jump on Israel and apply pressure to Israel and to demand things that are unreasonable," the right-wing minister said.

The comments came as Israel and Washington seek to tone down a diplomatic row which erupted over new settlement plans announced last week while US Vice President Joe Biden was in the region to renew peace efforts.

Israel's announcement of plans to build 1,600 new homes for Jewish settlers in mainly Arab east Jerusalem had already fuelled tension and sparked a row with the US. Washington, frustrated over a lack of progress in its peace brokering, reacted angrily to the announcement.

AFP