Shas spiritual guide Rabbi Ovadia Yosef gave his blessing Tuesday to a project to build 800 new residential units in east Jerusalem, 100 for each student killed in the terrorist attack at the capital's Mercaz Harav Yeshiva on Thursday.
Shas chairman Eli Yishai announced his party's intention to push ahead with the project during a tour of a strip of land called Kidmat Zion that borders on the east Jerusalem neighborhood of Abu Dis.
The plot also overlooks the Jebl Mukaber neighborhood of Ala Abu Dhaim, the terrorist who gunned down the yeshiva students.
"We want to build 100 apartments for each of the righteous yeshiva students who were killed," Yishai announced during the tour, which was organized by Ateret Kohanim, an organization that encourages Jews to live in Jerusalem across the Green Line and purchases land from Arabs.
"It is absurd that Arabs can continue to build as they please in Jerusalem while Jews are forbidden to do so," Yishai said.
A Shas spokesman said Yishai had spoken with Prime Minister Ehud Olmert on several occasions about approving the Kidmat Zion project.
Senior government officials, meanwhile, said Yishai's announcement took the Prime Minister's Office by surprise. and that they were not aware of any concrete plans.
"Shas is very much interested in moving forward with the building of the units," said the spokesman, though it was not being presented as a condition for Shas remaining in the government coalition.
Kidmat Zion is less than a kilometer from the Temple Mount.
Despite the potentially incendiary political environment, a Shas spokesman said Yishai and Yosef were not concerned.
"Do Arabs worry about Jewish reprisals?" asked the spokesman.
Jerusalem Deputy Mayor Eli Simhayof of Shas, who accompanied Yishai on the tour of Kidmat Zion, said that during morning prayers at Yosef's home in the city's Har Nof neighborhood the rabbi endorsed the construction project as a fitting way to commemorate the eight slain students.
"The rabbi is distraught by that horrible incident," said Simhayof. "He gave us his blessing and full support before we left. He told us that building there was a mitzva because it strengthened our hold on the heart of Jerusalem."
Six Jewish families currently live in Kidmat Zion, which, according to Ateret Kohanim spokesman Daniel Luria, is situated on land that has belonged to Jews since the 1920s and that is inside both Jerusalem's municipal boundaries and the route of the security barrier.
"A total of 598 dunams [about 150 acres] in that area belongs to Jews," said Luria. "Unfortunately, about 70 percent of the land has taken over by illegal Arab construction. The remaining 30% is what is slated to be built on."
Kidmat Zion is bordered on one side by the security barrier around Jerusalem and on the other side by a valley.
Asked if he was concerned that building Kidmat Zion might result in Arab violence, Luria said, "If we were concerned about every violent response staged by the Arabs, Israel would never have been established in the first place."
He said the Kidmat Zion project was not created as a response to the murder of the eight yeshiva students, and had been in the offing for more than three years. But he agreed that it was an appropriate response to the attack.
"If we have the strength and conviction to build 100 new Jewish homes every time they murder us, that will get that message across whose country this is and whose city this is," Luria said.
Peace Now director Yariv Oppenheimer said, "We hope Shas is just making empty declarations to score political points, even though that in itself is bad."
Oppenheimer added that building Jewish neighborhoods in the midst of Arab populations necessitated a military presence, which in turn created the tensions and frustrations of living under occupation.
"Shas is trying to create a situation where negotiations with the Palestinians over the division of Jerusalem will breakdown and it will be impossible to reach a feasible agreement," he said
Prime Minister's Office spokesman Mark Regev had no immediate reaction.
But Meretz MK Haim Oron accused Yishai of "preventing any chance of moving forward in a peace process."
Also Tuesday, Shas hailed the cabinet decision to build 750 housing units in Givat Ze'ev, a northern suburb of Jerusalem in the West Bank.
A party spokesman said the decision was a Shas victory.
"The first stage is Givat Ze'ev, to be followed by Betar Ilit and Modi'in Ilit [two haredi towns in the West Bank]."
Olmert agreed to allow construction after Shas threatened last week to abstain in a no-confidence vote against the government on Monday.
Two weeks ago, Shas leaders Industry, Trade and Labor Minister Yishai and Communications Minister Ariel Attias warned that the party would not support the government in the no-confidence vote unless the construction was authorized.
AP contributed to this article.