Israel approved the construction of 3,000 new housing units in Jerusalem and in the West Bank on Friday in response to the UN approving the Palestinian UN bid for non-member observer state status, government officials stated.The inner cabinet also decided to give the go ahead for the planning of thousands of housing units in area E1 that connects Jerusalem and Ma’aleh Adumim. "Israel is considering several other actions in response to the unilateral Palestinian UN move," Channel 10 quoted a government official as saying.Last week, Washington urged Israel not to allow construction in the area known as E-1 between Jerusalem and Ma’aleh Adumim as a possible response to the Palestinian UN bid.Building in E-1, which would create contiguity between Jerusalem and Ma’aleh Adumim to the northeast beyond the Green Line, is something various Israeli governments have long wanted to do, but which US opposition has prevented.In recent weeks, following appeals by the US and other international players not to respond in an overly harsh manner that would make a future return to negotiations even more difficult, Israel has moved from suggestions that it immediately annul the Oslo Accords and annex the large settlement blocs, to “tamer” measures, such as deducting money from taxes collected on behalf of the PA to cover the estimated NIS 800 million owed to the Israeli Electric Cooperation.The Labor Party on Friday criticized the timing of the decision to announce new building beyond the Green Line."There is no objection to Israel's right to build in Jerusalem, but at this time, it is advisable to lower the flames," the party stated."Declarations of this nature promote nothing and are liable to hurt Israel's interests in Jerusalem and in the settlement blocs," the statement added.Palestinian Authority chief negotiator Saeb Erekat condmened the building plans on Friday, saying they ran counter to efforts to restart the peace process."While the Palestinians are doing everything possible to keep the two-state solution alive, including with our vote in the United Nations, yesterday, the Israeli government is doing everything possible to destroy it," Erekat stated.Herb Keinon and Reuters contributed to this report.