Israel approved the construction of 3,000 homes in Jewish settlements in the West Bank and east Jerusalem, a government official said Friday, in what appeared to be a defiant response to the Palestinians' successful United Nations recognition bid.

The United Nations voted overwhelmingly Thursday to accept a Palestinian entity in the West Bank, the Gaza Strip and east Jerusalem as a non-member observer state, setting off jubilant celebrations among Palestinians.

Israel fiercely objected to the UN upgrade, saying peace could only come from direct negotiations, and unilateral moves would harm that prospect.

The Palestinians said UN recognition of a Palestinian state in the territories captured by Israel in the 1967 Mideast war was an attempt to salvage a possible peace deal. They said Israel's settlement expansion on war-won land was making a partition deal increasingly difficult.

Netanyahu rejects preconditions

Palestinian President Mahmoud Abbas has refused to negotiate with Israel while settlement construction continues in occupied territories. Israeli Prime Minister Benjamin Netanyahu has said negotiations must begin without preconditions.

The Israeli official, who spoke on condition of anonymity because he was not authorized to discuss the sensitive issue publicly, said Israel also decided to begin preliminary work in other areas of the West Bank, including the charged E-1 corridor that connects Jerusalem with the settlement bloc of Maaleh Adumim. Construction there would place a major obstacle for Palestinian statehood by cutting off east Jerusalem from the West Bank.

Palestinian negotiator Saeb Erekat condemned the Israeli announcement, saying Israel was "defying the whole international community and insisting on destroying the two-state solution."

He said the Palestinian leadership was studying its options.