JERUSALEM, July 13 (Reuters) - Israel razed on Tuesday an inhabited Palestinian home in East Jerusalem for the first time in eight months, effectively ending an unofficial freeze of such internationally-condemned demolitions.

A Reuters photographer witnessed a Palestinian family removing its belongings from the house in East Jerusalem's Beit Hanina neighbourhood before an Israeli excavator tore into the dwelling.

Israel's Jerusalem municipality said the home was built without a city permit.

The demolition seemed certain to draw a new wave of international criticism of Israeli policy towards Palestinians in East Jerusalem, an area captured in a 1967 war and annexed by Israel in a move that has not won world recognition.

The dwelling was razed a week after Prime Minister Benjamin Netanyahu held White House talks with U.S. President Barack Obama to patch up relations strained by Israeli settlement policy in East Jerusalem and the occupied West Bank.

Netanyahu promised Obama concrete steps -- confidence-building measures -- within weeks to try to coax the Palestinians back into direct peace negotiations.

Washington has publicly urged Israel not to demolish Palestinian homes built without permits. Palestinians, who want East Jerusalem as the capital of a future state in the West Bank and Gaza Strip, say it is impossible to obtain construction approval from Israeli authorities.

UNOFFICIAL FREEZE

Israel had refrained from implementing demolition orders since November in the politically sensitive Jerusalem area, after U.S. pressure not to take steps that could jeopardise peace talks with the Palestinians.

Netanyahu intervened several months ago to postpone city plans to demolish about 20 homes in another part of East Jerusalem, where the Israeli municipality is planning a new housing project.

Earlier on Tuesday, Israel razed two unfinished Palestinian homes and part of a factory in East Jerusalem.

Dozens of armed border police guarded an excavator as it tore apart the foundations of the cement structures in the Isawiya section of East Jerusalem. There was no violence, a police spokesman said.

Activists with the Israeli Committee against House Demolitions, a European-funded group that monitors the issue, said nobody lived in the buildings which were still under construction.