A Palestinian boy sits in the yard of his house with a new housing development in east Jerusalem's Jewish neighborhood of Har Homa in the background, 21 Sep 2009U.S. President Barack Obama says Israel's latest decision to authorize the construction of new settlements in occupied east Jerusalem does not make Israel safer, and could complicate peace efforts.

In an interview Wednesday with U.S. news station Fox News, Mr. Obama said additional settlement building could make it harder for Israel to make peace with its neighbors.

He added that he thinks such action, in his words, "embitters the Palestinians in a way that could end up being very dangerous."

Israeli officials announced plans Tuesday to construct 900 new housing units in east Jerusalem.

Nabil Abu Rdaineh, a spokesman for Palestinian President Mahmoud Abbas, said Israel's decision shows it does not want peace.

Mr. Abbas has said negotiations cannot resume until Israel freezes construction in east Jerusalem and the West Bank.

Israel annexed the mostly Arab east Jerusalem in the 1967 war, in a move that is not internationally recognized.

A U.S. official who did not want to be identified said U.S. Middle East envoy George Mitchell had urged Israeli leaders to block the proposed settlement construction during talks Monday in London.

United Nations Secretary-General Ban Ki-moon issued a statement Tuesday "deploring" the Israeli decision. He said it undermines efforts for peace and casts doubt on the viability of the two-state solution.

Britain also criticized Israel's action, saying a credible peace deal involves Jerusalem "as a shared capital" and that expanding settlements on occupied land in east Jerusalem "makes that deal much harder."

Officials close to Israeli Prime Minister Benjamin Netanyahu said Tuesday he is willing to show "restraint" in settlement construction in the West Bank, but will not accept any restriction on building in Jerusalem.

Some information for this report was provided by AP.