Israel Begins Building New Settlement Homes

It is thought Prime Minister Ariel Sharon’s plan could eventually see the construction of more than 2,000 houses on existing enclaves.

Palestinian Minister Saeb Ereket blasted Washington for backing the move. He said: "This is destroying the peace process, this is destroying the two state solution, if this land-grab continues the question that is asked: where would the Palestinian state be established?"

The plan appears to be aimed at placating Israeli right-wing opposition to Sharon’s blueprint for withdrawing from Gaza where around 8,000 settlers live in heavily guarded compounds.