UN Warns Israel of 'Fatal Blow' to Peace

Israeli settlement plans in a strategically sensitive area of occupied land near East Jerusalem would deal "an almost fatal blow" to peace hopes, UN head Ban Ki-moon has warned.

Palestinians in East Jerusalem could be completely cut off from the rest of the West Bank, he said.

Israel authorised 3,000 additional housing units a day after the UN voted to upgrade Palestinian status.

The UN General Assembly backed a proposal on Thursday by Palestinian Authority President Mahmoud Abbas to change the Palestinians' status at the UN to that of non-member observer state.

Israeli PM Benjamin Netanyahu has vowed to continue with the building plans.

In a statement on Sunday, Ban expressed "grave concern and disappointment" over the 3,000 newly authorised Israeli settlement units in East Jerusalem and the West Bank.

But he was most adamant that any plans to build in the so-called E1 area - between Jerusalem and the West Bank settlement of Maaleh Adumim - should be rescinded. An Israeli official has described the proposals in the E1 zone as "preliminary zoning and planning work".

"It would represent an almost fatal blow to remaining chances of securing a two-state solution," Ban said.

The US said earlier the expansion plan was counter-productive and would make it harder to resume peace talks, and EU foreign policy chief Catherine Ashton said she was "extremely worried" by prospects of large-scale construction.

Mahmoud Abbas has called for an end to settlement building and a return to peace talks.

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