Foreign Secretary William Hague accused Israel of undermining peace efforts today as he angrily condemned expanded settlement building in talks with defence minister Ehud Barak.
Thousands more illegal units in East Jerusalem were announced by Israel in response to Palestinian efforts to secure recognition as a state on United Nations bodies.
Israeli prime minister Benjamin Netanyahu said it was his country's "duty" to build across the capital and also threatened to withhold Palestinian tax revenues.
Speaking after today's talks, Mr Hague said while the UK remained "fully committed to Israel's security", he issued an "unequivocal condemnation" of the moves.
"These steps undermine efforts to achieve peace, and increase Israel's isolation at a time of enormous change in the Middle East region when we need to work together on shared concerns such as the appalling situation in Syria and the threat posed by Iran's nuclear programme.
"I urged Israel to revoke the plan for new settlements and to avoid further provocative steps which only make more difficult the Quartet's attempt to facilitate a return to talks."
Mr Netanyahu announced today that Israel would freeze its funding to UN cultural agency Unesco after its decision to grant the Palestinians full membership.
Up to 2,000 new apartments are to be built in Jewish areas of east Jerusalem.