On Thursday, the United Nations General Assembly overwhelmingly backed a resolution recognising Palestine within the 1967 borders as a non-member observer state.

Israel lashed out in response, confirming plans to build the 3,000 settler homes, without specifying exactly where they were to be located.

"In light of today's announcement, let me reiterate that this administration -- like previous administrations -- has been very clear with Israel that these activities set back the cause of a negotiated peace," Secretary of State Hillary Clinton said.

"The most lasting solution to the stalemate in Gaza would be a comprehensive peace between Israel and all Palestinians, led by their legitimate representative, the Palestinian Authority," she added in an evening speech to an audience in Washington that included Israeli Foreign Minister Avigdor Lieberman and Defence Minister Ehud Barak.

Like Israel, President Barack Obama's administration tried to stop the Palestinian push for recognition, saying it would place another obstacle in the path to peace and that statehood could only come through negotiations with Israel.