Israel's Housing Minister, Zeev Boim, is scheduled to announce later Sunday plans for the construction of nearly 900 more homes for Israelis in east Jerusalem, which Palestinians want as the capital of their future state.

Ministry spokesman Eran Sidis said today the government will invite tenders for 121 housing units in Har Homa (Jebal Abu Ghneim) and 763 in Pisgat Zeev, two large Jewish neighborhoods in Arab east Jerusalem.

Both neighborhoods are beyond the borders established after Israel occupied and annexed the eastern half of the city during the 1967 Six Day War.

The move is likely to anger Palestinians who, along with the U.S., have called for a halt to Israeli construction beyond the so-called Green Line.

Palestinian leaders have repeatedly said new construction in the West Bank, including east Jerusalem, badly compromises the peace talks and is the biggest obstacle to a final deal.

Israel considers the whole of Jerusalem to be its "eternal and undivided" capital and Prime Minister Ehud Olmert has said Israel will keep West Bank Jewish enclaves under any future peace accord.

Mr. Olmert embarks on a three-day visit to Washington later this week.

Some information for this report was provided by AFP, and Reuters.