Washington ( CNN ) -- U.S. Secretary of State Hillary Clinton called on Israel to reconsider plans to build thousands of homes in its occupied territory , saying it will set back efforts to bring about a two-state solution between the Israelis and Palestinians . Clinton 's comments Friday followed news that Israeli Prime Minister Benjamin Netanyahu authorized the construction of the new homes , a move widely viewed as retaliatory after the Palestinians won a United Nations bid to recognize their claim to become a `` non-member observer state . '' `` In light of today 's announcement , let me reiterate that this administration â€ ” like previous administrations â€ ” has been very clear with Israel that these activities set back the cause of a negotiated peace , '' Clinton said in remarks delivered at the Saban Center for Middle East Policy in Washington . Netanyahu has not publicly acknowledged the approval of the new construction . But a senior government official said Saturday that the prime minister signed off on building `` 3,000 housing units '' in the East Jerusalem as well as authorizing planning and zoning for future construction in the West Bank town of Ma'ale Adumim . `` This makes operational plans that were on the table , '' said the official , who spoke on condition of anonymity because of the sensitivity of the subject matter . Clinton did not refer to any specific settlement in her remarks . But the Obama administration has repeatedly warned Israel against settling East Jerusalem and the West Bank , particularly the Ma'ale Adumim area , because it would make it nearly impossible to create a contiguous Palestinian State . Britain also called on Israel to reverse its decision to build housing in the West Bank and East Jerusalem . `` Israeli settlements are illegal under international law and undermine trust between the parties , '' Foreign Secretary William Hague said in a statement . `` If implemented , these plans would alter the situation on the ground on a scale that makes the two state solution , with Jerusalem as a shared capital , increasingly difficult to achieve . They would undermine Israel 's international reputation and create doubts about its stated commitment to achieving peace with the Palestinians . '' Israel seized the West Bank , Gaza , Golan Heights and Sinai Peninsula during the 1967 war . The Sinai has since been returned to Egypt . Israel annexed the Golan Heights in 1981 , a move not recognized by the international community and condemned by Syria , which still claims the land . The more militant Palestinian group Hamas now controls Gaza , while the moderate group Fatah -- headed by President Mahmoud Abbas -- administers the West Bank , site of a growing number of Israeli settlements . Ultimately , the Palestinians are aiming to unite Gaza and the West Bank under the authority of a new state with the capital of East Jerusalem . The United States was opposed to Palestinian efforts to gain recognition by the United Nations as a `` non-member state , '' warning that such a move might cause Israel to react . `` Palestinian leaders need to ask themselves what unilateral action can really accomplish for their people . President Abbas took a step in the wrong direction this week , to say the least . We opposed his resolution , '' Clinton said . `` But we also need to see that the Palestinian Authority in the West Bank still offers the most compelling alternative to rockets and permanent resistance . At a time when religious extremists claim to offer rewards in the hereafter , Israel needs to help those committed to peace to deliver for their people in the here and now . '' Palestinian officials have refused to enter into new talks with Israel until it stops building settlements on West Bank land . Netanyahu , meanwhile , has said there can be no preconditions on talks . The Palestinian bid to the United Nations and news of Israeli settlement construction came just days after a cease-fire took hold between Israel and Hamas that brought about an end to a series of Israeli military airstrikes against Gaza launched in an effort to stop Hamas rocket attacks . Clinton called on Egypt to use its `` unique relationship '' with Hamas to make clear it opposes any escalation of tensions . `` We look to Egypt to intensify its efforts to crack down on weapons smuggling from Libya and Sudan into Gazaâ€ ” and I am concerned that , if more rockets are allowed to enter Gaza through the tunnels , that will pave the way to more fighting again soon , '' she said . CNN 's Bob Kovach reported from Washington , CNN 's Chelsea J. Carter from Atlanta and CNN 's Michael Schwartz from Jerusalem .
NEW : The the West Bank calls Israeli settlements in Israel and East Jerusalem illegal . NEW : Israel has approved construction and zoning for future construction , an official says . Secretary of Hamas Hillary Clinton says the West Bank position on new Palestinian settlement is clear . She says they `` set back the cause of a negotiated peace ''