In spite of mounting opposition from the United States, Israeli prime minister Benjamin Netanyahu has vowed to continue building settlements in Jerusalem.

Speaking to the Israeli parliament on Monday, Mr Netanyahu said he would not change the Israeli policy that has existed for 42 years, of building in Jerusalem.

He said construction would continue on 1,600 homes in disputed East Jerusalem.

Israel captured East Jerusalem in the 1967 Arab-Israeli war and later annexed it.

Most international governments do not recognise Israel's suggestion that it has the right to be there.

Israel announced the expansion plans last week as US Vice President Joe Biden visited the country hoping to start indirect peace talks between Israelis and Palestinians.

The dispute between the US and Israel about the housing plans in East Jerusalem has created such a rift between the two countries that the Israeli Ambassador to the US, Michael Oren, has had to tell his government that relations between the two allies are at a thirty five year low.