JERUSALEM (CNN) -- A Palestinian official said Sunday that Israel's plan to expand settlements in the West Bank was "like putting a stick in the wheels of the peace process."
An Israeli soldier stands guard near the Givat Zeev settlement in February.
Israeli Prime Minister Ehud Olmert approved the construction of 330 housing units in Givat Zeev, near Jerusalem. Olmert spokesman Mark Regev said the decision was initially made nine years ago, and approved Sunday "for economic reasons that have to do with the developers."
"They wanted to complete the project now, and they are to go ahead," Regev said, referring to the developers.
The Israeli newspaper Haaretz reported that Israel began marketing lots for the housing units in 1999 but stopped after the beginning of the Second Intifada, a rash of Israeli-Palestinian violence that erupted when then-opposition leader Ariel Sharon visited the Temple Mount in Jerusalem.
The high demand for housing and the improving security situation prompted contractors to ask the Housing Ministry to let them renew construction, Haaretz reported.
"It is consistent with our long-standing position that building within the large settlement blocs, which will stay a part of Israel in any final status agreement, will continue," Regev told Haaretz. "Construction outside the settlement blocs has been frozen."
The announcement came just days before Israeli and Palestinian representatives are slated to meet with Lt. Gen. William Fraser III, appointed by President Bush to help monitor the Mideast peace talks.
Fraser will convene a three-way committee this week to discuss both sides' obligations under the "road map" to peace established in 2003 by the Mideast Quartet, composed of the U.S., U.N., Russia and the European Union, she said.
Among other things, the road map calls for Palestinians to denounce violence and dismantle militants groups, and for Israel to halt settlement activity in the West Bank.
Israel has said it intends to keep some of its settlements, including Givat Zeev. Israelis and Palestinians have disagreed on whether certain disputed areas constitute settlements.
In December, Olmert ordered his government not to start any construction projects in the West Bank without his approval.
The announcement came after Palestinian officials expressed outrage that Israel's proposed funding for 2008 included construction plans in Ma'aleh Adumim and Har Homa, a disputed area on the Palestinian side of East Jerusalem, according to the 1948 borders. Israel considers Har Homa part of Jerusalem.
At the time, Secretary of State Condoleezza Rice told a U.S. newspaper that she admonished Israeli officials for the attempt to expand Har Homa, a move she said was not helpful to the fragile peace process.
After Olmert's Sunday decision, chief negotiator Saeb Erakat said Palestinians "condemn this decision" to expand the Givat Zeev settlement.
"It is like putting a stick in the wheels of the peace process," he said.
Israeli-Palestinian violence has escalated in recent weeks, as Palestinian militants have indiscriminately launched rockets into Israel and Israel has responded with military offensives in Gaza. More than 110 Palestinians have been killed.
Last week, a shooting at a seminary school in Jerusalem left eight students dead, but sources linked the attack to Hezbollah, a Shiite militant group based in Lebanon, and not Hamas, the Palestinian militant group that controls Gaza.
On Sunday, Israel Defense Forces announced that a soldier died from wounds incurred in a roadside bombing last week in Gaza. He was one of four Israeli soldiers to die in recent weeks.
The military wing of Islamic Jihad took responsibility for the attack, saying it was a reprisal for the death of one of its senior leaders during an Israeli military operation.
Also last week, Rice wrapped up her trip to the region aimed at restarting peace talks. Palestinian President Mahmoud Abbas had suspended the talks in response to the Israeli operation in Gaza. After some wavering, Abbas agreed to resume the talks, but no date was set.
Rice's trip was part a major push by President Bush and his administration to secure a Mideast peace deal before he leaves office in January. E-mail to a friend