The European Union on Tuesday called into question Israel's intentions for the future, after progress was made on a controversial project to build 770 housing units in the East Jerusalem settlement of Gilo.
The move comes despite the EU, the United Nations, the United States and Russia calling in early July for Israel to end its settlement activities in the West Bank if it is serious about a two-state solution in the Middle East.
"The [Gilo] decision raises legitimate questions about Israel's long-term intentions, which are compounded by the statements of some Israeli ministers that there should never be a Palestinian state," a spokesperson for EU foreign policy chief Federica Mogherini said in a statement issued on Tuesday.
The new housing units contribute to "the establishment of a ring of Israeli settlements around the city, thus further cutting East Jerusalem off from the southern West Bank," the statement said.
"The EU calls on Israel to reverse this decision and to cease its settlement activity," it added.
Hagit Ofran of Peace Now, the Israeli group that monitors settlements' expansion, told dpa on Monday that her group had already warned against the project in 2012.
But it advanced another to stage in the long planning and building process when it was presented to a local committee early this week, Ofran said.
The international community has been trying to revive Middle East peace talks, after the last US-led attempt collapsed in April 2014. Violence between Israelis and Palestinians has flared up since.