With strains still high between Israel and the United States over the issue of Jewish settlements, construction of a contentious Jewish housing project in a predominantly Arab neighborhood of East Jerusalem could start at any time, Israeli officials and experts said Wednesday

Jerusalem city hall gave the project the final go-ahead on March 18, days after city officials said the landowners had paid the required fees. Once the fees were paid, City Hall said in a statement on Wednesday, “approval was granted automatically.”

A spokesman for the White House said on Wednesday that it was seeking “clarification” on the building project. In New York, the United Nations Secretary General, Ban Ki-moon, told the Security Council that “all settlement activity is illegal, but inserting settlers into Palestinian neighborhoods in Jerusalem is particularly troubling.”

He added: “This leads to tensions and undermines prospects for addressing the final status of Jerusalem.”

The plan in question is for construction of 20 residential units in the Shepherd Hotel compound in Sheik Jarrah, a neighborhood populated mostly by Palestinians, and more recently by some Israeli nationalist Jews, just north of the Old City.

The green light for the project was first published by Ynet, an Israeli news Web site, on Tuesday night, shortly before Prime Minister Benjamin Netanyahu met with President Obama in Washington.

Given the tense atmosphere surrounding building plans in the Israeli-annexed eastern part of Jerusalem, Israeli officials Wednesday played down the significance of the latest development, saying approval was a technicality that required no further decision by any committee or body.

“This plan began to be formulated in the 1980s,” Naomi Tsur, the deputy mayor of Jerusalem responsible for planning and environment, said in a telephone interview. “It was given final approval nine or ten months ago.” The latest approval , she said, “was a technical step put out by a computer somewhere. But somebody with peculiarly accurate timing released this non-information within minutes of the Obama-Netanyahu meeting.”

Officials described the Ynet report, which said that final approval had been granted only on March 18, as “distorted” and intended “to stir up a provocation” during Mr. Netanyahu’s visit to Washington. The plan received final approval in July 2009, officials said.

Israel captured East Jerusalem from Jordan in the 1967 war, but its annexation was never internationally recognized. The Palestinians claim East Jerusalem as the capital of a future state and demand a halt to Israeli expansion in the occupied territories, including East Jerusalem, before Israeli-Palestinian negotiations can start.

The Obama administration was close to starting indirect, so-called “proximity talks” between the Israelis and Palestinians, with an American envoy shuttling between the two sides. Those were put off when Israel announced plans this month for 1,600 new housing units in an ultra-Orthodox neighborhood of East Jerusalem during a visit here by Vice President Joseph R. Biden, infuriating the Obama administration.

Mr. Netanyahu apologized for the bad timing but continues to insist on Israel’s right to build anywhere in what Israel considers its united capital of Jerusalem.

Still, in a sign of the sensitivity of the issue, a spokeswoman for the Israeli Interior Ministry confirmed on Wednesday that a meeting of the district planning committee had been put off earlier this week pending the conclusions of a committee set up by Mr. Netanyahu to improve government coordination regarding building plans in Jerusalem.

The 20-unit complex in question is to be built on property bought by a Miami-based businessman, Irving Moskowitz, in 1985. Mr. Moskowitz has long supported the development of Israeli and Jewish housing in Arab areas of East Jerusalem. The Shepherd Hotel was originally built as a villa for Haj Amin al-Husseini, the grand mufti of Jerusalem who notoriously aligned himself with Hitler. The historic building on the site will be preserved, Ms. Tsur said. The property is not far from Israeli government buildings and foreign consulates.

Daniel Seidemann, an Israeli lawyer who opposes Israeli expansion in East Jerusalem and is active in promoting a political solution for the city, said he has been warning the Israeli and American governments for months that the Shepherd Hotel building project was likely to get under way as soon as there was a prospect of peace talks.

“Projects like this are a spoiler’s paradise,” he said.

Leftist Israeli groups like Peace Now, which oppose Israeli settlement in the territories occupied in 1967, have been monitoring and highlighting new construction plans.

According to Israeli planning and construction regulations, construction usually has to start within a year after approval has been granted, or the building permit will be nullified.

Ms. Tsur, the deputy mayor, said that once fees are paid by developers and the green light is given, the “clock begins to tick.”

“They can start building tomorrow,” she said.

Ms. Tsur also said that the final approval was given last year in “full coordination” with the British and United States consulates. But both the United States and Britain raised concerns about the project when it was approved last July. The British Consulate is very close to where the new construction will begin.

Saeb Erekat, the chief Palestinian negotiator, said in a statement on Wednesday that “Israel is digging itself into a hole that it will have to climb out of if it is serious about peace.”

He added: “There is overwhelming international consensus on the illegality of Israel’s settlements, including in East Jerusalem, and the damage they are doing to the two-state solution,” he said.