Prospects for Israeli-Palestinian peace talks plummeted yesterday when Israel brought forward plans to build over 700 homes in a Jewish enclave in Arab east Jerusalem.

Settlement watchdog group Peace Now spokeswoman Hagit Ofran said Israel had renewed a call for bids on 708 homes in the Gilo area of east Jerusalem.

Ms Ofran questioned the timing of the tenders, which were originally published in November.

“I don’t see a reason to reissue the tenders now specifically,” she said, adding that it had been done in order to “make problems” for the faltering peace negotiations.

A spokesman for Israeli Housing Minister Uri Ariel insisted that the timing was unrelated to the talks.

He claimed that the tenders were reissued because earlier calls for bids failed to attract contractors.

In a decisive reaction to Israeli intransigence over pledged prisoner releases, Palestinian President Mahmoud Abbas announced on Tuesday that he would resume a campaign for extended international recognition of Palestine.

At a televised meeting in the West Bank, Mr Abbas signed applications by the state of Palestine to join several UN agencies and ratify international treaties, beginning with the Fourth Geneva Convention.

Leading members of his Fatah movement and the Palestine Liberation Organisation had voted unanimously to support the applications.

Mr Abbas said he had been compelled to act because Israel had failed to carry out the promised release of Palestinian prisoners by the end of March.

Presidential adviser Nabil Abu Rdeneh condemned the latest issuing of tenders for settlement houses, saying it further undermined the struggling US peace efforts.

“All settlement activities must end because they violate international law,” he said.

But Israel responded to the Palestinian applications with direct threats.

“If they are now threatening to go to UN institutions, they must know something simple: they will pay a heavy price,” said Tourism Minister Uzi Landau — suggesting Israel could respond by annexing parts of the West Bank.

“One of the possible measures will be Israel applying sovereignty over areas which will clearly be part of the state of Israel in any future solution,” Mr Landau added.