Ehud Olmert, Israel's prime minister, has approved plans to expand Jewish settlements in the occupied West Bank.

Israeli officials said new housing units will be erected in the settlement of Givat Ze'ev, which is 8km from central Jerusalem.

Sunday's announcement was made three days after an armed Palestinian man killed eight students at a Jewish seminary in Jerusalem that is associated with the settler movement.

Separately, an Israeli soldier wounded by Palestinian fighters on Thursday died of his wounds on Sunday.

Israel Radio reported that the ultra-Orthodox Shas party, a key coalition partner of Olmert, threatened to quit the government unless the construction was approved.

Eran Sidis, a spokesman for Zeev Boim, the Israeli housing minister, said the decision was taken after consultations with Olmert.

New construction

Olmert has barred ministries from ordering new Israeli construction in the West Bank without his approval because of its political ramifications.

The latest approval effectively reverses a freeze on settlement expansions in the West Bank made after US-brokered talks in Annapolis.

A previous understanding between Olmert and the US differentiates between settlement expansion in east Jerusalem and the West Bank. Although the distinction is not consistent with international law, which holds settlements in both areas as illegal, the US has indicated that it primarily opposes expansion in the West Bank.

Sidis said a plan to build 750 housing units in Givat Ze'ev was approved in 1999 but suspended two years later after the Palestinian uprising led to a shortage of construction workers.

Under the current plan 200 units will be built initially and another 550 in the future.

Zeev Boim released a statement saying, "The renewal of the [project] is important news."

"The addition of hundreds of housing units is part of a policy aimed at meeting demand and keeping prices level, while addressing the demographic needs of Jerusalem," the statement said.

Israel has said in any future peace agreement with the Palestinians it intends to annex Givat Ze'ev, which is home to 10,000 Israelis, into a "Greater Jerusalem".

It also wants to retain several other major settlement enclaves in the West Bank, which Palestinians hope to make part of a future state.

PHOTO CAPTION 

Ehud Olmert, Israel's prime minister

Al-Jazeera