RAMALLAH, Palestinian Territories (AFP) - Israel's plan to build over 1,000 new homes for settlers in annexed east Jerusalem is likely to cause an "explosion" of violence, a senior Palestinian official warned on Monday.

"Today (Israeli Prime Minister Benjamin) Netanyahu approved the building of 1,060 apartments in east Jerusalem ... Such unilateral acts will lead to an explosion," Jibril Rajoub of Palestinian leader Mahmud Abbas's Fatah party, told reporters at a news conference in the West Bank city of Ramallah.

Rajoub, a senior figure within the Fatah movement of Palestinian president Mahmud Abbas, said it was likely that such a move would only inflame tensions in the eastern sector of the city that has been swept by almost daily clashes over the past four months.

Earlier Monday, Netanyahu's office confirmed it had decided to advance construction of around 1,000 new homes in Har Homa and Ramat Shlomo, two Jewish settlement neighbourhoods in occupied east Jerusalem.

It would be a mistake to expect the Palestinians to simply ignore such actions, Rajoub said. "Mr Netanyahu should not expect a white flag from the Palestinian people," he said. "If he wants to keep pushing us all into a vicious circle of bloodshed and killing, he must draw the right conclusion from what happened in Gaza," he said referring to a bloody 50-day war over the summer which killed nearly 2,200 Palestinians.

"No white flag came from that - which is real proof of our commitment" to the Palestinian desire for independence, he said.

Israel seized east Jerusalem during the 1967 Six-Day War and later annexed it in a move never recognised by the international community.

It does not view construction there as settlement building. But such moves infuriate the Palestinians who want the eastern sector of the city as capital of their future state.