The city council in Jerusalem canceled a vote to approve the construction of 492 units -- such as homes, synagogues and other public buildings -- in areas of East Jerusalem annexed by Israel.
Council member Hanan Rubin, a member of the city's zoning committee, said the decision followed a request from Israeli Prime Minister Benjamin Netanyahu.
It came days after the United Nations Security Council passed a resolution
condemning Israel's settlements
in the occupied West Bank and East Jerusalem and as Kerry prepared to give his speech on Wednesday.
"The municipality regards housing in Jerusalem as a municipal need rather than a political action, and therefore there is no need to vote on this on a sensitive day when John Kerry is to give a speech," Rubin said. "We don't want to be a part of a political controversy."
The reason behind Netanyahu's call for the city council's vote to be canceled remains unclear, and the vote could still come before the city council's zoning committee in the future.
Reasons for opposition to settlements
• Settlements in the West Bank and East Jerusalem are built on land seized by Israel during the 1967 Arab-Israeli Six-Day War.
• Many in the international community believe that such settlements are illegal and a barrier to any future "two-state" peace deal. Palestinians claim East Jerusalem as the capital of their future state.
• The UN Security Council resolution states that Israel's settlement program has "no legal validity and constitutes a flagrant violation under international law." But Israel disputes this.
• A "two-state solution" envisages a Palestinian state existing alongside Israel, based on territory in Gaza, the West Bank and East Jerusalem -- but Israel's continued building threatens its viability.
• Settlements are controversial within Israel, too. While they are widely supported by right-wing and ultra-Orthodox groups, other Israelis see them as an obstacle to peace.
Frayed relations with US
Friday's Security Council resolution passed after the US, which usually vetoes such resolutions, decided to abstain.
In response, Netanyahu summoned the US ambassador to Israel on Sunday. On Monday he ordered the Israeli Foreign Ministry temporarily to limit all working ties
with the embassies of the 12 UN Security Council members who voted in favor of the resolution.
On Wednesday, the mayor of an Israeli settlement in the West Bank, Oded Revivi, sharply criticized Kerry, who leads US policy on Israel.
"John Kerry is a stain on American foreign policy who is ignorant of the issues. He has chosen to eternalize his legacy as the worst secretary of state in history that chose to stab his closest ally in the back while rivers of blood flowed like water across the Middle East," said Revivi, mayor of Efrat and chief foreign envoy of the YESHA Council, an umbrella organization that represents an estimated 430,000 Isr
US President-elect Donald Trump pledged US policy on Israel would change once he was inaugurated. "We cannot continue to let Israel be treated with such total disdain and disrespect. They used to have a great friend in the US, but not anymore," he said on Twitter.
'Declaration of war'
Netanyahu has threatened a diplomatic "declaration of war" against New Zealand if it supported the resolution, an official said.
Netanyahu made the threat to New Zealand's Foreign Minister Murray McCully hours before the vote last Friday, according to an official with knowledge of the conversation who asked not to be identified because of diplomatic sensitivities.
New Zealand was one of four countries which introduced the resolution. Netanyahu instructed the Israeli Ambassador to New Zealand to return to Israel for consultations after the vote.
A statement from New Zealand's Foreign Ministry sent to CNN said the decision to co-sponsor the resolution was "consistent with long-held New Zealand policy positions" regarding Palestine.
"Israel's response to our decision is matter for the Israeli government to comment on," the statement said. "We look forward to continuing to engage constructively with all parties on this issue."
While the resolution passed Friday is non-binding, Israel is concerned that there may be follow-up action
at the United Nations -- specifically, a resolution that would set conditions for negotiations.
Such a resolution would issue parameters for some of the most sensitive issues in the Israeli-Palestinian conflict, including borders, the status of Jerusalem as a contested capital, Palestinian refugees, and a time limit for negotiations.
The international peace conference scheduled for January 15 in Paris could be the forum for discussing such a resolution. That would give the international community time to introduce the resolution at the UN Security Council before the end of Obama's time in office.
Israel has vowed not to attend the conference. The Palestinians say they will attend.
Settlement building in the occupied West Bank is considered illegal under international law, although Israel disputes this. The United States considers settlements "illegitimate" and "an obstacle to peace."