Israel has approved construction of more than 500 more homes in the West Bank, an official said Monday, on the heels of an apparent U.S. policy shift on settlements that the Palestinians warned "will destroy the peace process."

The new units are in addition to bids for construction of some 1,000 homes in four of its large West Bank settlements announced last week.

In Monday's further additions, the Israel Lands Authority �� responsible for some West Bank lands �� has decided that contractors will be allowed to begin building 300 units next year, said Ortal Tzabar, a spokeswoman for the authority.

The Defense Ministry has approved the construction of 232 units in Adam and Emmanuel but the Housing Ministry has not decided to go ahead with the project at this time, Housing Ministry spokesman Kobi Bleich said.

The disagreement on the new policy revolves around the U.S-backed "road map" peace plan, which mandates that Israel completely halt settlement construction while the Palestinians dismantle violent groups responsible for attacks against Israelis.

Presented last year, the plan was never implemented. Instead, Palestinian suicide bombings and Israeli attacks against militants filled the political landscape. Throughout, both sides have insisted the "road map" envisioning a Palestinian state alongside Israel is the basis for peace.

The Palestinian state would be on the West Bank and in the Gaza Strip �� Arab areas where Israel has placed more than 235,000 settlers in 150 settlements. All but 8,000 settlers are on the West Bank. The Palestinians wants all settlements removed.

But U.S. officials in Israel confirmed to The Associated Press that though there has been no formal decision, the American government is not objecting to construction in the main West Bank settlement blocs, as long as the settlements themselves are not expanded �� while an internal administration debate over the issue continues.

Palestinian Prime Minister Ahmed Qureia refused to accept the possibility that U.S. policy has changed.

"I can't believe that America is now saying that settlement expansion is all right," he said Sunday. "This will destroy the peace process."

Nabil Abu Rdeneh, a top aide to Palestinian leader Yasser Arafat, called on the White House to "clarify" its position, fearing it would "encourage the Israeli government to continue and escalate its war against the Palestinian people."

The U.S. officials, speaking on condition of anonymity, said an American team will visit Israel next month to discuss where construction would be permitted.

In Washington, administration officials insisted they are not signaling any major change in policy.

Source: Agencies