The venerable Israeli left-wing organisation Peace Now has lost a lot of its steam in recent years.

The failure of the Oslo process and other diplomatic initiatives has led to public apathy over the group's efforts to push for a two-state solution.

The announcement put out by Peace Now last week - two hours before Prime Minister Benjamin Netanyahu was due to meet President Barack Obama in the White House - that the Jerusalem municipality had finalised plans to build 2,610 new homes in the neighbourhood of Givat Hamatos, across the pre-1967 border, catapulted them back onto centre-stage.

The announcement did not overshadow the meeting - Mr Netanyahu repeated his commitment to a two-state solution in his remarks to the press before the doors were closed, and Mr Obama only mentioned the settlement issue briefly, during the meeting itself.

But immediately afterwards, as Mr Netanyahu's motorcade was still on its way to Andrews Air Force Base, the State Department issued an angry condemnation of the building plans that were "poisoning" the atmosphere.

Mr Netanyahu's team tried to limit the damage, claiming that the building plans were old ones and this was just a bureaucratic formality, used by Peace Now for PR purposes.

One adviser accused the organisation of carrying out "a strategic terror attack" and in his briefing to the Israeli media, Mr Netanyahu accused them of not having "national responsibility."

Peace Now responded that their role was to promote a national dialogue over the settlement building and that it was the prime minister who was "selling Israel's interests for the settlers."