The White House and State Department said the plans run counter to longstanding U.S. policy, particularly as they relate to a sensitive piece of land outside Jerusalem known as E1.
"We reiterate our long standing opposition to Israeli settlement activity and East Jerusalem construction," White House press secretary Jay Carney told reporters. "We oppose all unilateral actions, including settlement activity and housing construction as they complicate efforts to resume direct, bilateral negotiations and risk prejudging the outcome of those negotiations and this including building in the so called E-1 area."
"We urge Israeli leaders to reconsider these unilateral decisions and exercise restraint as these actions are counterproductive and make it harder to resume direct negotiations to achieve a two state solution," he said.
At the State Department, spokesman Mark Toner said the E1 plans are "especially damaging" to prospects for a resumption in Israeli-Palestinian peace talks.
The E1 area "area is particularly sensitive and construction there would be especially damaging to efforts to achieve a two-state solution," Toner said in a statement.
Israel on Friday announced that it would move ahead on plans to build 3,000 settler homes in the West Bank and east Jerusalem on territory the Palestinians claim as theirs to punish the Palestinians for winning U.N. recognition. It also said it would begin planning work in E1, where construction would essentially end hopes for an eventual Palestinian state to be contiguous.
Building in E1 would sever the link between the West Bank and east Jerusalem, which the Palestinians claim for a future capital. It would also cut off the northern part of the West Bank from its southern flank.
The Palestinians say construction in that territory would kill any hope for establishing a viable state of Palestine. Successive U.S. governments have agreed, and under intense American pressure, Israel has avoided building settlements in the area. It has, however, developed roads and infrastructure and built a police station.