Prime Minister Benjamin Netanyahu's office on Tuesday called criticism of Israeli settlement building "absurd" after a UN envoy strongly hit out at his government over the issue.

"The claim that it is illegal for Jews to build in Jerusalem is as absurd as saying Americans can't build in Washington or the French can't build in Paris," Netanyahu spokesman David Keyes said in a statement.

Nickolay Mladenov, the UN coordinator for the Middle East peace process, told the Security Council on Monday that Israeli settlement expansion has surged in the two months since a key report called for a halt.

The report by the diplomatic Quartet -- the European Union, Russia, the UN and the United States -- said construction of settlements on land earmarked to be part of a future Palestinian state is killing off prospects for a peace deal based on a two-state solution.

Since July 1, Israeli has advanced plans for more than 1,000 housing units in annexed east Jerusalem and 735 units in the occupied West Bank, Mladenov said.

He also said Israel has undertaken a land survey on the outskirts of Bethlehem for the establishment of a new settlement in a move that would contribute to the "dismemberment of the southern West Bank."

The Security Council declared Israeli settlements in occupied territory to be illegal in a resolution adopted in 1979.

Mladenov said that determination was "equally true and even more urgent a concern today."

Keyes said the UN envoy's comments "made peace harder to achieve by distorting history and international law".

"It is not the presence of Jews, who have lived in the West Bank and Jerusalem for thousands of years, that is a barrier to peace," he said. 

"Rather, it is the unceasing efforts to deny that historical connection..."

Israel occupied the West Bank in the Six-Day War of 1967 in a move never recognised by the international community. 

It later annexed east Jerusalem, which the Palestinians see as their future capital.

Source: AFP