The United States sees Israel's announcement on Sunday of a land appropriation for possible settlement construction in the occupied West Bank as "counterproductive" to peace efforts and urges the Israeli government to reverse the decision, a State Department official said.

Israel laid claim to nearly a thousand acres (400 hectares) in the Etzion settlement bloc near Bethlehem, a move which an anti-settlement group termed the biggest appropriation in 30 years and a Palestinian official said would cause only more friction after the Gaza war.

"We have long made clear our opposition to continued settlement activity," the U.S. official said. " This announcement, like every other settlement announcement Israel makes, planning step they approve and construction tender they issue is counterproductive to Israel's stated goal of a negotiated two-state solution with the Palestinians."

"We urge the government of Israel to reverse this decision," the official said in Washington.