(CNN) -- The Palestinian negotiating team has resigned and will not participate in peace talks with the Israelis, a spokesman for the Palestinian mission to the United Nations told CNN Wednesday.
"The team resigned due to the Israeli illegal practices, especially settlement activities," Rabii Hantouli said in an e-mail. "There are efforts to convince them to revert."
"It is time for the international community and the Quartet members to stop treating Israel as a government above the laws of man and hold them accountable," Palestinian Chief Negotiator Saeb Erakat told Al Jazeera America. He was referring to the United Nations, Russia, United States and European Union's peace efforts.
Settlement building in East Jerusalem and on the West Bank is "the issue that will make or break the negotiations," he said. "(Israeli Prime Minister Benjamin) Netanyahu has a choice: settlements or peace; he can't have both."
Ending the talks would be a blow to efforts by the Obama administration to get long-stalled discussions back on track.
But a senior administration official downplayed the news, saying that Erakat had issued that threat in the past, and that Palestinian President Mahmoud Abbas -- "the man in charge" -- has said that he is committed to the U.S.-brokered Mideast peace negotiations with Israel.
"We've seen Saeb Erakat do this before where he'd threaten to resign because he's not happy with the way talks are going but ... he ends up taking it back and continuing with the negotiations," the official told CNN. "If this ends up being a real resignation this time, which again we don't know, but if it is, we expect the negotiations will continue."
The official added, "We have to see how it plays out" but "no one is really concerned about it at this point."
The negotiators submitted their resignations to Abbas, Hanan Ashrawi told CNN in an interview in Ramallah on the West Bank.
"Reason is that they believe that there is too much pressure coming from the Americans," she said.
"The talks can be resumed and successful if the Americans can rectify the flaw of Israeli exceptionalism and impunity by bringing Israel into compliance with international law and cessation of all settlement activity.
"It will be very difficult to find any Palestinian who will be willing to negotiate with such disparity between occupier and the occupied."
The next step, Ashrawi said, would be for the PLO Executive Committee to accept the resignations.
Talk about expanding settlements has "rendered the peace talks irrelevant if not a total mockery," she said.
The announcement came a day after Israel canceled controversial plans to construct more than 20,000 homes in East Jerusalem and on the West Bank.
Construction and Housing Minister Uri Ariel made the decision after Netanyahu asked him to reconsider the long-term building plans.
"This is a meaningless step -- legally and in practice -- and an action that creates an unnecessary confrontation with the international community at a time when we are making an effort to persuade elements in the international community to reach a better deal with Iran," Netanyahu's office said in a statement.
"At this time, the attention of the international community must not be diverted from the main effort -- preventing Iran from receiving an agreement that will allow it to continue its military nuclear program."
Lior Amihai of the activist group Peace Now said the Housing Ministry issued 23,786 planning tenders two weeks ago; the tenders are issued to companies to draw plans to be used in possible construction.
Lara Friedman, director of policy and government relations at Americans for Peace Now in Washington, said the plans had included construction in areas deep in the West Bank, east of the barrier that separates Israel from the West Bank.
Ashrawi said earlier that Netanyahu appeared to be intent on scuttling any hope for a solution in peace talks recently relaunched by U.S. Secretary of State John Kerry.
There are currently more than 300,000 settlers in the West Bank, according to the Israeli Bureau of Statistics, and about 200,000 in East Jerusalem.
CNN's Elise Labott, Jill Dougherty, Anna Maja Rappard, Michael Schwartz and Azadeh Ansari contributed to this report. Ian Lee reported from Ramallah, Kareem Khadder reported from Jerusalem, Tom Watkins wrote in Atlanta