JERUSALEM (AFP) - Israel is inviting bids to build over 1,000 settler homes in the West Bank, including east Jerusalem, the Housing Ministry said on Sunday, ahead of peace talks with the Palestinians.

"Tenders will be published" later in the day for 793 units in annexed east Jerusalem and 394 elsewhere in the West Bank, the ministry said in a statement, three days before the next round of talks.

Housing Minister Uri Ariel, of the far-right Jewish Home party, dismissed international criticism of settlement building on occupied Palestinian land as illegal and an obstacle to peace.

"No country in the world accepts diktats from other countries on where it is allowed to build or not," he said in the statement.

"We shall continue to market apartments and build throughout the country."

The statement said that plots were to be offered in Har Homa and Gilo, both on east Jerusalem's southern outskirts and in Pisgat Zeev, on the city's northern edge.

Tenders would also be invited for homes in Ariel, in the northern West Bank, in Maaleh Adumim, east of Jerusalem, and in Efrata and Beitar Ilit, around Bethlehem, it said.

The United States State Department said last week that Israeli and Palestinian negotiators would resume talks in Jerusalem on Wednesday on ending their long-standing conflict.

They resumed direct negotiations in Washington last month, ending a three-year hiatus after painstaking US mediation.

The last talks in 2010 broke down on the issue of settlement building.

Palestinian negotiator Mohammed Shtayeh said the latest move was proof of Israel's intentions.

"It is clear that the Israeli government is only interested in illegal settlement building, throwing away American and international efforts to resume negotiations," he said in a statement.

Mr Lior Amihai, of settlement watchdog Peace Now, said that if negotiations collapsed to a background of Israeli settlement activity, the Jewish state could find itself in a worse situation than it was before talks.

"We need to push and encourage the negotiations," he said. "It's a pity that the government chooses to place more obstacles in the way."

Israeli's chief negotiator in the talks, Justice Minister Tzipi Livni, was to meet with Defence Minister Moshe Yaalon and Science and Technology Minister Yaakov Peri, a former head of the Shin Bet security agency, later on Sunday to approve a first batch of 26 prisoners to be freed ahead of Wednesday's talks.

A total of 104 long-term Palestinian and Israeli Arab prisoners, in jail since before the 1993 Oslo peace accords, are to be freed in four stages, depending on progress in the talks.