JERUSALEM – Israel approved on Monday the building of 455 settler homes in the occupied West Bank, a move opposed by its U.S. ally and Palestinians but which could pave the way for a construction moratorium sought by Washington.

A Defense Ministry list of the first such building permits since Prime Minister Benjamin Netanyahu took office in March showed the homes would be erected in areas Israel says it intends to keep in a future peace deal with the Palestinians.

Palestinian chief negotiator Saeb Erekat said Israel's decision further undermined any belief that it is a credible partner for peace.

Israeli officials announced on Friday that Netanyahu intended to give the go-ahead for the new projects in the occupied West Bank, drawing swift condemnation from the White House.

The permits, signed by Defense Minister Ehud Barak, for 455 housing units were widely seen in Israel as an attempt by Netanyahu to mollify pro-settler members of his government and Likud party before agreeing to a freeze of construction starts.

This is a huge smokescreen, said Pinhas Wallerstein, a settler leader, suggesting the step was only a token gesture meant to mask a real intention to bend to U.S. pressure to curb settlement expansion.

U.S. President Barack Obama, raising the prospect of steps by Arab countries to normalize relations with Israel, has pushed Netanyahu for a settlement freeze to open the way for a revival of Israeli-Palestinian peace talks suspended since December.

Netanyahu has resisted a complete moratorium, saying natural growth of settler families must be accommodated. Some 2,500 housing units are under construction in settlements and Israeli officials said those projects would continue.

Palestinian President Mahmoud Abbas has demanded a settlement freeze as a condition for returning to peace negotiations.

In a statement, Abbas's top negotiator Erekat said: Israel's decision to approve the construction of over 450 new settlement units nullifies any effect that a settlement freeze, when and if announced, will have.

SETTLEMENT DEAL

U.S. envoy George Mitchell is due back in the region later this week to try to finalize a settlement deal before a possible meeting at the U.N. General Assembly around September 23 involving the Israeli leader, Abbas and Obama.

Israeli opposition leader Tzipi Livni of the centrist Kadima party scoffed at what she described as an attempt by Netanyahu to throw a bone to settlers before agreeing to a construction moratorium.

There's nothing real happening here save for Netanyahu's (political) survival, Livni, a former foreign minister, told reporters, comparing approval of new housing projects before a construction freeze to building an igloo in the summer.

It was not immediately clear when ground would be broken for the new homes. Yariv Oppenheimer of the anti-settlement movement Peace Now said that in the past it usually took up to a year before building began after permits were issued.

The Defense Ministry outlined the following construction plans: 149 homes in the settlement of Har Gilo, 12 in Alon Shvut, 84 in Modiin Ilit, 76 in Pisgat Zeev, 25 in Kedar, 20 in Maskiot and 89 in Maale Adumim.

Most of those settlements are near Jerusalem. The others are in the Jordan Valley to the east or close to central Israel.

Some 500,000 Israelis live in the West Bank and Arab East Jerusalem, territory captured in a 1967 war. Palestinians say the settlements, deemed illegal by the World Court, could deny them a viable and contiguous state.

(Additional reporting by Ori Lewis and Ali Sawafta in Ramallah; Editing by Charles Dick)

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