France condemned Wednesday Israel's "ill-timed and illegal" decision to authorise the building of 1,600 homes for Jewish settlers in occupied east Jerusalem.

"This decision is totally ill-timed at the moment when peace negotiations are just restarting between Israelis and Palestinians," said foreign ministry spokesman Bernard Valero.

"It is in any case illegal under international law," he added.

On Tuesday, Israel's interior ministry approved new housing units in Ramat Shlomo, a Jewish settlement in mainly-Arab east Jerusalem, which has been occupied by Israel since 1967.

The move angered Palestinian leaders, who want east Jerusalem as the capital of their promised state, just 48 hours after they agreed to renew discussions after months of US shuttle diplomacy.

The United States, the European Union and United Nations Secretary General Ban Ki-moon have also condemned the building plan.