US Vice President Joe Biden on Tuesday condemned Israel's approval of 1,600 new housing units for young haredi families in the east Jerusalem neighborhood of Ramat Shlomo, saying that the timing of the decision undermines the peace process the United States is attempting to revive.

Biden, visiting in Israel, issued a harshly worded statement criticizing the Israeli move, saying its timing was especially troubling by coming on the eve of a new round of US-mediated peace talks.

"The substance and timing of the announcement, particularly with the launching of proximity talks, is precisely the kind of step that undermines the trust we need right now," Biden said.

"We must build an atmosphere to support negotiations, not complicate them," he added, warning that "unilateral action taken by either party cannot prejudge the outcome of negotiations."

Moments earlier, US President Barack Obama's top spokesman, Robert Gibbs, condemned the announcement from the White House.

In Jerusalem, the Interior Ministry stressed that the plan approved on Tuesday had "been in the works for over three years."

Interior Minister Eli Yishai's media adviser stressed that "The Committee meeting was determined in advance and there is no connection to US Vice President Joe Biden's visit to Israel... Yishai updated Prime Minister Binyamin Netanyahu on the foregoing earlier this evening."

Back-dropped by the golden shrine of the Dome of the Rock, Dr. Jill Biden, wife of US Vice President Joseph Biden, not present, looks on during her visit to JerusalemThe public has 60 days in which to formally file their opposition to the plan, a ministry spokeswoman said.

In Ramallah, Palestinian Authority negotiator Saeb Erekat also slammed the move, saying it was destroying trust needed to go forward with the new round of indirect peace talks, which the two sides agreed this week would take place under the mediation of US envoy George Mitchell.

"With such an announcement, how can you build trust? This is destroying our efforts to work with Mr. Mitchell," Erekat said. "It's a really disastrous situation. I hope that this will be an eye-opener for all in the international community about the need to have the Israeli government stop such futile exercises."

Earlier on Tuesday, Biden took pains to praise Netanyahu for steps he has taken to make a more conducive atmosphere for talks with the Palestinians.

"A peace agreement will require both parties to make some historically bold commitments," Biden said. "You have done it before, and I am confident for world peace you will do it again."

Abe Selig contributed to this report.