JERUSALEM, Feb 23 (Reuters) - Palestinians said on Monday the Israeli-controlled municipality of Jerusalem was preparing to evict 1,500 Palestinians and demolish over 80 homes in the eastern part of the disputed city.

Fakhri Abu Diab, a member of the Committee for the Defence of the Territory of Silwan, said demolition orders had been issued on the pretext that the homes had been built without the required zoning and construction permits.

He said the real motive was ethnic cleansing. It was part of Israel's plan to gradually drive the Arab population out of the city, which Israel claims as its undivided capital.

We will be in the street. Our women and children will be homeless, Abu Diab said. The demolitions will affect a whole generation and foster hatred from the residents as they see only this side of the Israeli government.

City workers escorted by Israeli border police on Sunday surveyed the homes, took measurements and photographs and drew plans, creating panic among the residents, Abu Diab said.

Israel regards all of Jerusalem as its capital, including East Jerusalem and adjacent parts of the West Bank annexed since their capture in 1967, a claim not recognized internationally.

The Palestinians say Israel must freeze all settlement activity in East Jerusalem and the West Bank so peace talks can proceed, culminating in a deal to end the Israeli occupation and create a Palestinian state. Some 500,000 Israelis live in the settlements, which are considered illegal internationally. Yasser Abed Rabbo, an official of the Palestine Liberation Organization, denounced the demolition project as a real massacre against the Palestinian presence in the holy city. He called for a general strike on Saturday to protest.

Israeli and Palestinian media said the area was to be cleared in order to create a recreational green zone near the Old City. The Jerusalem municipality had no immediate comment.

The more than 80 homes slated for demolition are in the neighborhood of al-Bustan, in the Silwan area of East Jerusalem. Most of the houses in al-Bustan were built in the 1980s and 1990s, according to the Israeli human rights organization B'Tselem.

A few were built before Israel's occupation in 1967.

Al-Bustan residents first received demolition orders in 2005, said B'Tselem. The group says 402 homes belonging to Arab residents have been demolished in East Jerusalem since 2004.

A local committee in al-Bustan had been working to comply with requirements imposed by city authorities in hopes of averting the demolitions. But city authorities last week rejected its proposals, Abu Diab said. (Writing by Ivan Karakashian; editing by Douglas Hamilton and Andrew Roche)