Jerusalem (CNN) -- Israeli bulldozers demolished part of a hotel in East Jerusalem on Sunday, prompting swift condemnation from Palestinians.
The building plan, which was given final approval last year, was met with disapproval from the United States at the time which called for the Israeli government to put off any demolition.
Israel demolished part of the hotel as part of a plan to build 20 housing units for Jews in a predominantly Palestinian neighborhood of East Jerusalem.
The chief Palestinian negotiator, Saeb Erakat, denounced the action.
"The state of Israel is demolishing one Palestinian property after another in an effort to cleanse Jerusalem of its Palestinian inhabitants, heritage and history," he said in a statement.
He said such actions "undermine the two-state solution and negotiations process."
The United States had called on Israel to halt the housing project, but Prime Minister Benjamin Netanyahu responded by saying "our sovereignty (over Jerusalem) cannot be challenged". The project was given final approval last March.
The Shepherd Hotel was built in the 1930s by a prominent Palestinian family and was purchased from the state of Israel in 1985 by American millionaire Irving Moskowitz , an avid supporter of Jewish building in East Jerusalem.
Moskowitz developed plans for the 20 housing units that sparked the hotel's demolition on Sunday.