The prime minister of Israel appears surprised by a rebuke from the US administration about its new settlement expansion.

Benjamin Netanyahu has held an urgent meeting with his Cabinet after US Secretary of State Hillary Clinton made an angry phone on Friday to tell him how the administration feels about Jewish settlement expansion in disputed East Jerusalem.

Ms Clinton told the PM he had sent a highly negative signal at a time when the US is trying to re-establish the Middle East peace process.

Last Tuesday the Israel Interior Ministry made an announcement on the approval of new settlements as US Vice President Joe Biden was landing in Israel.

Ms Clinton described the timing of the announcement as an insult.

Mr Netanyahu has since said the announcement was made without his knowledge, and the timing was unintentional, but he had apologised to Biden while he was in Israel and had hoped the matter was at an end.

Israel has continued to refuse to impose a full freeze on settlement construction in the West Bank.

Peace talks are now on hold, with the Palestinians saying they will not return to the negotiating table until Israel rescinds the decision for new construction in East Jerusalem.