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Israel to build 3,000 settler homes after UN vote
It is also speeding up the processing of 1,000 planning permissions.
The decision comes a day after a vote at the UN General Assembly upgraded the Palestinians' status at the UN to that of non-member observer state.
The US said the expansion plan was counterproductive and would make it harder to resume peace talks.
"We reiterate our longstanding opposition to settlements and East Jerusalem construction and announcements," White House spokesman Tommy Vietor said.
Earlier Palestinian President Mahmoud Abbas called for an end to settlement building and a return to peace talks.
An Israeli official, speaking on condition of anonymity, said some of the new units would be built between Jerusalem and the settlement of Maaleh Adumim.
Plans to build settlements in the area, known as E1, are strongly opposed by Palestinians, who say the development will cut the West Bank in two, preventing the creation of a contiguous Palestinian state.
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