Israel is moving forward with another large housing project on territory it seized during the 1967 Mideast war, unveiling plans to build 2,610 units in what critics say would be the first entirely new development on disputed Jerusalem land in 14 years.

The planned project, to be called Givat Hamatos, would expand the footprint of Jewish housing development into new areas, nearly cutting off Arab neighborhoods of East Jerusalem from West Bank communities. If built, the project would make it harder to create a Palestinian state with contiguous borders and a capital in East Jerusalem, opponents say.

"This one is really bad," said Hagit Ofran of Peace Now, the Israeli anti-settlement group. "This would block the potential of a two-state solution."

Peace Now said Givat Hamatos would be the first new Israeli development in the Jerusalem area since the creation Har Homa in 1997, which was approved by Israeli Prime Minister Benjamin Netanyahu during his first term in office.

The project would isolate the Palestinian communities of Beit Safafa and Shurafat, which are considered to be part of East Jerusalem, from the West Bank city of Bethlehem. It would be built on land that Israel now considers to be part of southern Jerusalem. Palestinians and the international community never recognized the annexation and view the land as occupied West Bank territory.

Government officials emphasized that the project was still in the early stages of the approval process.

"This proposal has been around for years and there has been no decision taken yet, either at the municipal level or the national level," said Israeli government spokesman Mark Regev.

Plans for Givat Hamatos were originally announced in 2008, but were shelved to allow for revisions. On Oct. 11, Jerusalem authorities quietly resubmitted the plans, starting the clock on a 60-day public comment period.

If the project is approved, groundbreaking would not be expected to take place for two years. Israel has said it needs to build new homes to meet growing demand around Jerusalem.

Palestinian officials said the proposal was a sign that Netanyahu is not serious about resuming peace talks and is thumbing his nose at the international community, which has repeatedly urged Israel to halt settlement construction.

The Mideast "quartet," consisting of the United States, Russia, the United Nations and the European Union, has called upon Palestinians and Israelis to refrain from provocative actions and return to the negotiating table by the end of the month.

Chief Palestinian negotiator Saeb Erekat said the Givat Hamatos proposal "makes a mockery of the quartet statement and other international efforts to bring about a just and lasting peace."

International pressure on Netanyahu has been growing in recent weeks as Israel announced other housing expansions, including 1,100 units in the settlement of Gilo, which is next to the proposed site of Givat Hamatos.

The U.S. also criticized Israel's decision this week to create a committee to investigate ways to legalize some small settlements in the West Bank that were built without official Israeli permission. Previously Israel had pledged to dismantle many of the so-called outposts, but critics say Netanyahu is searching for a way to make some of them permanent.

In a twist not typically seen in Israeli housing developments, the Givat Hamatos proposal might also clear the way for several hundred new housing units for Palestinians who own private land in the area. As much as one-third of the project — or 900 of the 2,610 units — could be built as an expansion to the Palestinian community of Beit Safafa, Peace Now estimated.

Some viewed this move as an attempt by Israel to soften potential criticism.

Ofran questioned whether the Palestinian units would materialize, saying Israel had promised to allow expanded Palestinian housing at Har Homa, but that those units were never built.

"It could be very hard for private Palestinian owners to get approval to build," she said. "But even if they did, that would leave 1,700 units [for Jewish residents], which is still enough to destroy the two-state solution."