The controversial move angered Mr Biden, who "showed up 1.5 hours late for dinner tonight at (Israeli Prime Minister Benjamin Netanyahu's) residence," a White House press office statement said.

"I condemn the decision by the government of Israel to advance planning for new housing units in east Jerusalem," Mr Biden said in another statement. "The substance and timing of the announcement, particularly with the launching of proximity talks, is precisely the kind of step that undermines the trust we need right now and runs counter to the constructive discussions that I’ve had here in Israel."

The Israeli decision also infuriated the Palestinians, who consider settlements to be a major hurdle to reach peace and want occupied east Jerusalem as the capital of their promised state.

"This is a dangerous decision and will hinder the negotiations," said Palestinian Authority spokesman Nabil Abu Rudeina.

Palestinian president Mahmud Abbas later phoned Arab League chief Amr Mussa to appeal for "urgent policy measures" in response to "the escalating Israeli provocations," according to his office.

AFP