JERUSALEM - Israel announced plans yesterday to build hundreds of homes in a disputed East Jerusalem neighborhood, drawing quick Palestinian condemnation that the move would undermine newly revived peace talks.

The new housing would expand Har Homa, a Jewish neighborhood in an area Palestinians claim as capital of a future state. Palestinian officials appealed to the United States to block the project, but Israel says a pledge to halt settlement activity does not apply in the holy city.

The plan focuses attention on one of the most difficult issues facing Israeli and Palestinian negotiators in peace talks that are supposed to resume this month - the future of Jerusalem.

The announcement yesterday that 307 homes would be built at Har Homa comes at a time of rising Israeli frustration over almost daily rocket attacks on Israel by Islamic extremists in Gaza.

Har Homa, home to 4,000 Israelis, is just inside the expanded city limits of Jerusalem, drawn after Israel captured East Jerusalem in the 1967 war. Israel annexed East Jerusalem days after the war, but no country recognized the annexation.

Israel's prime minister, Ehud Olmert, has indicated willingness to withdraw from some Arab neighborhoods within the expanded Jerusalem boundaries. But in principle he backs the long-standing Israeli policy that the whole city is Israel's capital.

Since 1967, Israel has built a string of Jewish neighborhoods in East Jerusalem, with about 180,000 residents.

Palestinians object to Israeli construction in East Jerusalem, pointing to the road map peace plan. The plan is the basis of renewed talks agreed on at the Mideast summit last week in Annapolis, Md.

The road map's first phase bans building in Israeli settlements in the West Bank. Palestinian negotiator Saeb Erekat said he sent an urgent message to Secretary of State Condoleezza Rice, asking her to block the construction.

"Israel's ever-expanding settlement enterprise in the occupied Palestinian territory poses the single greatest threat to the establishment of an independent, viable and contiguous Palestinian state, and hence, to a just and lasting peace," Erekat said.

Mark Regev, a spokesman for Olmert, said, "Israel has never made a commitment to limit our sovereignty in Jerusalem."

Bush Plans a Mideast Visit in January

President Bush will

visit

the Mideast next month, presumably in an effort to promote the new round of Israeli-Palestinian peace talks, the White House

said yesterday.

White House officials

would not provide additional details, but Israeli media outlets, quoting unidentified Israeli government sources, reported that Bush would visit Israel and the Palestinian territories.

A visit to Israel

would be Bush's first as president.

Last week,

he presided

over a conference in Annapolis, Md., that gave an international blessing to the new peace effort and said he would do all he could to encourage progress on the issue.

"The president

believes now is an appropriate time to visit the region," White House press secretary Dana Perino said yesterday.

Israel's Channel 2

television reported that Bush would focus on Israel-Palestinian peace talks on his visit

but also would discuss Iran's nuclear program. Other Israeli media outlets reported that Bush would visit Jan. 9.

Bush's engagement

in the peace effort has become

a subject of keen interest.

- Inquirer wire services