The European Union has said it was summoning the Israeli ambassador over the government's plan to build thousands of new settler homes in the West Bank and east Jerusalem.

"The Israeli ambassador has been invited by the Executive Secretary General of the EEAS (European External Action Service) to meet to set out the depth of our concerns,"said Maja Kocijancic, spokeswoman for EU foreign policy chief Catherine Ashton, as cited by international media.

The ambassador is to meet Ashton's deputy Pierre Vimont on Thursday, EU sources said, according to The Telegraph.

Reports of a decision by Israel to build the homes in East Jerusalem and the West Bank emerged last week, with an official source confirming it was in retaliation for the Palestinians winning the rank of a UN non-member state a day earlier.

The decision to build in a key area east of Jerusalem, called E1, sparked a storm of diplomatic protest from Washington and Brussels as well as from UN chief Ban Ki-moon, who on Sunday warned it would deal an "almost fatal blow" to the prospects of resolving the conflict.

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