Israel’s announcement that it would build 1,400 new homes across the Green Line has provoked local and international protests.

The announcement had been due to coincide with the release of the third tranche of 26 Palestinian prisoners two weeks ago, but was postponed to avoid a clash with US Secretary of State John Kerry’s visit to the region.

It was issued despite warnings from the Palestinian Authority that further settlement building could derail the peace talks, as well as opposition from US and European diplomats.

It also elicited a rare outburst from Finance Minister Yair Lapid, who attacked his coalition partners. He said: “These are not building tenders but empty building announcements. This isn’t only a bad idea, but a bad idea that Yesh Atid will do everything to make sure remains a bad and unfulfilled idea.” Opposition Leader Yitzhak Herzog also attacked the decision, calling it “a dramatically wrong real-estate deal”.

Palestinian President Mahmoud Abbas’s office said: “It proves Israel’s insistence on sabotaging the American efforts to bring peace.”

Another rift within the government appeared on Tuesday when Yediot Ahronot published off-the-record criticism of Mr Kerry by Defence Minister Moshe Ya’alon. He said: “He [Kerry] came to us resolved and acting out a strange obsession and a messianic feeling, he can’t teach me anything about the conflict with the Palestinians.”

He added: “The only thing that can ‘save’ us is John Kerry winning the Nobel prize and leaving us in peace.”

Following rebukes from Washington, as well as Prime Minister Benjamin Netanyahu, Mr Ya’alon issued an apology.

Meanwhile, according to Haaretz, Mr Netanyahu has insisted that he will not abide by the “framework agreement” that Mr Kerry is expected to propose in the coming weeks if it includes any mention of Jerusalem’s status. It is hard to see how any document without a mention of Jerusalem will be approved by the Palestinians. American diplomats are looking for a creative wording that could accommodate both sides.

However, the prime minister put out a mixed message on Jerusalem by ensuring that the cabinet legislative committee would vote down a proposed law to make government negotiations on the city subject to Knesset approval.

While previous similar proposals have received some support from inside government, only two Habayit Hayehudi ministers voted in favour this time after pressure from Mr Netanyahu and Foreign Minister Avigdor Lieberman. Although Mr Netanyahu did not speak publicly against the law, this was a clear signal that he is not prepared to restrict himself in negotiations on any of the core issues.