Reports that Israel plans to approve the construction of hundreds of housing units in the West Bank before implementing the settlement freeze that was agreed upon with the United States has angered the Palestinian leadership.

Top Palestinian negotiator Saeb Erekat said on Friday the planned Israeli move is "unacceptable". Earlier Friday an aide to Israeli Prime Minister Benjamin Netanyahu said, "The prime minister plans to approve the construction of hundreds of news housing units in Judea and Samaria, before the freeze."

"I think the only thing that will be suspended by this announcement is the peace process," Erekat said.

The Palestinians are also uneasy about Israel's plans to continue construction on the 2,500 housing units already being built. Jerusalem sources have stressed that this construction will be completed, in accordance with understanding reached with the US.

A government source explained that these agreements were the result of preparatory talks Netanyahu's envoys Yitzhak Molcho and Mike Herzog held with US envoy George Mitchell's ahead of the latter's visit to Israel next week.

Netanyahu's office said that after the construction of the housing units in question is approved, the prime minister will be willing to consider "temporarily suspending" further construction in the West Bank for a number of months.

The source said this would be done in exchange for normalization steps from Arab counties. According to Netanyahu, this could advance that peace initiative being lead by US President Barack Obama.

Details revealed following Molcho and Herzog's talks showed that the construction of hundreds of new housing units will take place in all of the West Bank, mainly due to requests filed by local authority heads due to natural growth in the major settlement blocs.

The new construction permits do not include building in Jerusalem, as Israel has already stated that construction in the capital will continue without limitations.