“We are not putting any limitations on building in [occupied] Jerusalem, it is our capital,” he said at the start of the weekly cabinet meeting.

“The same way that [states] build in every capital — London, Paris, Washington, Moscow — Israel builds in [occupied] Jerusalem,” Netanyahu said. “Our bond to our capital is no less ancient and powerful.”

The interior ministry on Thursday gave final approval for plans to build 797 homes in Gilo, a colony neighbourhood in the southern flanks of occupied east Jerusalem on land seized during the 1967 Middle East war and later annexed in a move not recognised by the international community.

It sparked criticism from EU foreign policy chief Catherine Ashton who said she “deeply regrets” the decision.

“Settlements [colonies] are illegal under international law and threaten to make a two-state solution impossible,” a statement said.

Israel says [occupied] Jerusalem is its “eternal, indivisible” capital, and does not view construction in the east as colony activity. But the Palestinians want occupied east Jerusalem as capital of their future state and fiercely oppose any extension of Israeli control there.

But [occupied] Jerusalem Mayor Nir Barkat said he “completely rejected” the EU’s remarks on Gilo, saying the neighbourhood was “an inseparable part of Jerusalem and we have no intention of apologising for that,” in a statement issued late Saturday.