JERUSALEM (AFP) - The Israeli government has given the green light for the planning of more than 1,000 new Jewish settler homes in annexed Arab east Jerusalem, an official told AFP on Monday.

"The government has decided to advance the planning of more than 1,000 units in Jerusalem - roughly 400 in Har Homa and about 600 in Ramat Shlomo," the official in Prime Minister Benjamin Netanyahu's office said in English, referring to two existing east Jerusalem settlements.

He did not elaborate and declined to comment on the likely political and diplomatic impact of such a move at a time when Palestinians and the international community are already incensed at latest settler moves in the east Jerusalem neighbourhood of Silwan, where there have been almost nightly clashes for months.

"There is never a good time to do such things, now more than ever as Jerusalem is burning," Lior Amichai of settlement watchdog Peace Now told AFP.

He said it was unclear from the statement whether the government was close to issuing construction tenders or wanted to fast-track plans in their early stages.

Ties between Israel and its close ally, the United States have become increasingly frayed over Israeli officials' public criticism of US foreign policy and the Obama administration's alarm at Netanyahu's relentless settlement-building.

The Israeli official also said that plans would be "advanced for infrastructure projects in the West Bank that will include roads for the Palestinians".