The Foreign Secretary has described plans to build nearly 1,300 homes in East Jerusalem as an “obstacle to peace”.

The proposed construction, in the Har Homa and Ramot settlements, has been approved by Israel’s interior ministry. But a ministry official said building would be unlikely to begin for several years.

However William Hague, who has just returned from an official visit to Israel, said: “The latest announcement…is extremely disappointing and unhelpful.

“Their construction should stop.”

Philip Crowley, a spokesman for the US State Department, said the White House considered the announcement deeply disappointing and “counter-productive" to the peace process.