Israel pressed ahead with plans to build 3,300 new settlement homes in east Jerusalem and the West Bank, raising tensions with the United States at a time when the allies are at odds over a new Palestinian government.

Israeli Housing and Construction Minister Uri Ariel said the government will build 1,500 new homes on land the Palestinians claim for a future state in response to this week’s creation of a Palestinian unity government that includes Hamas, which is dedicated to the destruction of the Jewish state. The Gaza Strip-based Islamic movement is classified as a terrorist group by Israel, the U.S. and European Union.

“I welcome this decision to give a proper Zionist response to the establishment of the Palestinian terror government,” Ariel said in an e-mailed statement. The government has issued marketing bids for the new homes, he said, the first step in a process that can take years.

The erection of an additional 1,800 settlement homes in various stages of approval or construction will be moved ahead at a meeting of a government planning committee next week, an Israeli official said.

U.N. Secretary-General Ban Ki-moon is “deeply concerned” about Israel’s tenders for new housing units in the West Bank and reiterated that settlement construction on occupied territory is illegal under international law, according to an e-mailed statement from Ban’s office.

U.S. Ambassador to Israel Dan Shapiro condemned the plans for new homes as detrimental to peace efforts.

“We oppose settlement construction in the West Bank, as well as announcements regarding such construction,” he told Israeli Army Radio. The United States would have denounced the move “with or without this disputed issue of a new Palestinian transitional government,” Shapiro added.

The United States announced this week it will work with the new Palestinian government because Palestinian President Mahmoud Abbas did not appoint any Hamas Cabinet ministers and he pledged to honor past agreements with Israel.

“Based on what we know now, we intend to work with this government, but will be watching closely to ensure that it upholds principles that President Abbas reiterated,” State Department spokeswoman Jen Psaki said Monday..

Israeli Prime Minister Benjamin Netanyahu responded that he was “deeply disappointed” with Psaki’s statement.

“If the U.S. administration wants to advance peace, it should be calling on Abbas to end his pact with Hamas and return to peace talks with Israel,” he said.

The Palestinians condemned the announcement of new settlement homes, which came on the 47th anniversary of the start of the 1967 Mideast war when Israel captured territories including the West Bank and east Jerusalem.

“The government led by Prime Minister Netanyahu has reaffirmed its intent to challenge international law and international peace efforts by further colonizing our occupied country,”Chief Palestinian negotiator Saeb Erekat said in an e- mailed statement.

Erekat said the Palestinians “are carefully studying and weighing” their response.