UPDATE 3-Israel presses on with plan for 6,000 new settler homes

* Marathon sessions planned on construction

* EU joins chorus of criticism

* Netanyahu deputy brushes off censure

(Adds British comment)

JERUSALEM, Dec 18 (Reuters) - Israeli officials said they

would press on with plans this week to build 6,000 homes for

settlers on land claimed by Palestinians, defying criticism from

Western powers who fear the move will damage already faint hopes

for a peace accord.

Stung by de facto recognition of Palestinian sovereignty in

a U.N. General Assembly vote last month, Israel announced it

would expand settlements in the occupied West Bank and East

Jerusalem.

An Israeli Interior Ministry planning committee on Monday

gave preliminary approval for 1,500 new homes in the Ramat

Shlomo settlement.

The panel will now start discussing plans for another 4,500

homes in two other settlements, Givat Hamatos and Gilo, in

back-to-back sessions that could run into next week, ministry

spokesman Efrat Orbach said on Tuesday.

Israel counts the three settlements as part of its Jerusalem

municipality, though they are on West Bank land seized in the

1967 Middle East war.

Palestinians see the settlements as obstacles to achieving a

viable state with a capital in East Jerusalem.

"Settlement activity is unilateral and is completely adverse

to the continued viability of a two-state solution and the

possibility for our people to continue to exist," Palestinian

Prime Minister Salam Fayyad told Reuters on Monday.

Most countries deem the settlements illegal and Western

powers have been especially troubled by Israel's declared intent

to build in E-1, a wedge of land between East Jerusalem and the

West Bank where it had previously held off under U.S. pressure.

The United States and European Union condemned the plans.

"We are deeply disappointed that Israel insists on

continuing this pattern of provocative action. These repeated

announcements and plans of new construction run counter to the

cause of peace," U.S. State Department spokeswoman Victoria

Nuland told reporters.

"Israel's leaders continually say that they support a path

towards a two-state solution yet these actions only put that

goal further at risk.

"So we again call on Israel, and the Palestinians, to cease

any kinds of counterproductive, unilateral actions and take

concrete steps to return to direct negotiations," Nuland said.

British Foreign Secretary William Hague called the Israeli

decision "a serious provocation and an obstacle to peace".

"If implemented, it would make a negotiated two-state

solution, with Jerusalem as a shared capital, very difficult to

achieve," he said.

"We urge Israel to reverse this decision and take no further

steps aimed at expanding or entrenching settlement activity."

NETANYAHU DEPUTY DEFENDS MOVE

Israel says the future Palestine's border should be set in

direct negotiations, from which Abbas withdrew two years ago in

protest against the settlements.

Israeli officials have accused him of avoiding new talks

because of unwillingness to compromise and because his authority

does not extend to the other Palestinian territory, Gaza, which

is under rival Hamas Islamists hostile to the Jewish state.

Israeli Vice Prime Minister Moshe Yaalon told Israel's Army

Radio the expansion of the Jerusalem-area settlements was a

resumption of plans put on hold while Western powers tried to

persuade Abbas to abandon the Palestinians' U.N. status upgrade.

"We said, 'We won't build, so as not to give Abu Mazen

(Abbas) an excuse to go to the U.N. and an excuse not to come to

the table,'" Yaalon said.

"After he did what he did ... we removed these restrictions

from ourselves," Yaalon added.

He dismissed the international criticism. "The world

automatically condemns any construction over the Green Line, and

then moves on," he said, referring to the West Bank boundary.

Critics in Israel have suggested Israeli Prime Minister

Benjamin Netanyahu is pandering to the right-wing electorate as

he prepares to run for re-election in a Jan. 22 ballot.

(Additional reporting by Noah Browning in Ramallah and Arshad

Mohammed in Washington; Editing by Maayan Lubell and Andrew

Roche)

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