Jerusalem officials approved new housing for Jews in the heart of an Arab neighborhood, officials said Wednesday, infuriating Palestinians who see the growing Jewish presence in the city's war-won eastern sector as undermining their aspirations to statehood.

The approval further complicates efforts to restart deadlocked negotiations between Israel and the Palestinians.

The municipality said the plan to build 14 apartments in the Ras al-Amud neighborhood met all the necessary conditions for approval.

Palestinians deplore any expansion of the Jewish presence in east Jerusalem because they hope to establish their future capital there.

The construction in Ras al-Amud will be another link in the chain of Jewish settlements around east Jerusalem's Old City, said Ziad Hamouri, head of the Palestinian Jerusalem Center for Socio-Economic Rights. He predicted it would create a new point of friction between settlers and longtime Arab residents of east Jerusalem.

"For the residents of Ras al-Amud, this will be very bad," Hamouri said. "They (the Jewish settlers) will expand. They attack residents, trying to create anger and anexiety and to push people to leave."

The fate of east Jerusalem, whose Old City is home to shrines sacred to Islam, Judaism and Christianity, is the most emotionally charged issue in the Israeli-Palestinian conflict.

Palestinians, like the rest of the international community, do not recognize Israel's annexation of east Jerusalem after capturing it from Jordan in 1967.

Israel maintains the annexation gives it the right to build in east Jerusalem without restriction.

The new housing is to be erected at the site of a former Israeli police station just outside the Old City. The station was vacated several years ago after the headquarters relocated to another disputed site, just outside Jerusalem in the West Bank.