Two years ago, Israel announced plans to build new homes in east Jerusalem just as Secretary of State Condoleezza Rice was preparing to meet with Israeli Foreign Minister Tzipi Livni, prompting Rice's spokesman to characterize the move as "not helpful."

Put in a similar predicament Tuesday after Israel's announcement of 1,600 new housing units in east Jerusalem, Vice President Biden swiftly decided to condemn the move in the harshest terms. After making Prime Minister Binyamin Netanyahu wait 90 minutes for dinner, Biden told him that the statement was being released as they ate. Biden reiterated his criticism Wednesday, before television cameras, after meeting with Palestinian President Mahmoud Abbas.

Biden's rebuke was far tougher than Rice's. And the stakes are higher for Israel, which has been eager to reaffirm relations with the United States after getting off to a rocky start with President Obama a year ago. Israel is jittery about Iran's nuclear progress and longs for U.S. backing. In Washington, administration officials were furious at the Israeli announcement and said they will watch Netanyahu's response very closely to see whether the dispute is affecting the broader U.S.-Israeli relationship.

"He is clearly embarrassed. We accept that he did not know about the announcement," said a senior U.S. official, who requested anonymity to discuss the issue candidly. "But he is head of government. What does he do about it? What does he do to walk it back? That embarrassment does create an opportunity to walk it back in some way."

The official said the administration wants Netanyahu to demonstrate he is taking steps to reverse the housing announcement before special envoy George J. Mitchell returns to the region next week to help bring about a resumption of talks between Israel and the Palestinians. "Netanyahu has been saying for several months that he is prepared to negotiate," the official said. "Now there is an opportunity to test that willingness."

Obama came into office demanding a full settlement freeze, including in east Jerusalem, that would not allow expansion even because of population growth. That stance struck many analysts as unrealistic, and after months of tension with the Israeli government, the administration accepted a temporary, limited freeze that did not include east Jerusalem. Palestinians attacked the deal as a cave-in and refused to return to direct talks.

On Wednesday, Abbas said Israel's new construction, in an area Palestinians see as their future capital, undermined negotiations. Still, he used the opportunity of Biden's visit to address Israelis directly, saying, "The time has come to make peace -- peace based on a two-state solution," suggesting there was still hope for peace talks to resume, though in an indirect fashion mediated by the United States.

The greater damage could be to the image of the U.S.-Israeli alliance. Israeli politicians and news commentators were apoplectic about the mismanagement of the Jerusalem housing announcement and the way it affected Biden's visit. Biden was told of the construction in his limousine after leaving Israel's Holocaust memorial museum to freshen up for the dinner with Netanyahu.

At a cabinet meeting Wednesday, Netanyahu, finding himself on the defensive, acknowledged it was a "major mishap" but noted that Israel had never committed itself to freezing construction in east Jerusalem, according to Israeli media reports.

At the dinner, Netanyahu told Biden that he was just as surprised about the timing of the announcement by the Interior Ministry and that he in no way intended to cast a shadow over the visit, an Israeli official said.

With many Israelis feeling snubbed that Obama has yet to visit, Biden's visit was intended to mend fences. But in the Israeli press, Biden's declarations of affection for Israel and the Jewish people were overwhelmed by commentaries about Israel's political mismanagement.

"Crisis in Visit of U.S. Vice President Biden" and "U.S.: Israel Played a Trick on Us" blared the headlines in Yedioth Ahronoth, Israel's largest daily newspaper.

Akiva Eldar, one of Israel's leading political commentators, wrote in his column in the Haaretz newspaper: "Biden, who came to Israel determined to embrace Netanyahu all the way to indirect talks with the Palestinian Authority, swore allegiance to the security of Israel, but was slapped in the face with such force that it was heard in Washington."

More than a matter of wanting to embarrass U.S. officials trying to advance the peace process, the Jerusalem housing announcement illustrated the continued lack of political consensus here on the core bargain of the peace process as it was envisioned in the 1990s: trading land for peace.

For Netanyahu, who had hoped to avoid the peace process discussion as much as possible and focus on Iran's nuclear program, "the timing couldn't have been worse," said Zalman Shoval, a former U.S. ambassador to Israel who is part of a 15-member forum Netanyahu established three months ago to advise him on U.S. relations. It remained unclear Wednesday whether the approval of the housing units was coincidentally timed to Biden's visit or purposely placed on the agenda of a Jerusalem committee to signal the lack of support for a division of Jerusalem among a key member of Netanyahu's political coalition.

For Biden, the point was moot.

"The decision by the Israeli government to advance planning for new housing units in east Jerusalem undermined" the trust necessary for "profitable negotiations. That is why I immediately condemned the action," he said.