Israel's latest plan to build some 900 units in the capital's Gilo neighborhood complicates efforts to relaunch peace talks and embitters the Palestinians, US President Barack Obama said Wednesday. Obama told Fox News in an interview that additional settlement building did not make Israel safer. He said such moves made it harder to achieve peace in the region and embittered the Palestinians in a way that he said could be "very dangerous." Meanwhile, the European Union said Wednesday it was dismayed by the Gilo expansion approval. In a statement, the EU Presidency stressed that settlement activities, house demolitions and evictions in east Jerusalem were illegal under international law. "Such activities also prejudge the outcome of final status negotiations and threaten the viability of a two-state solution," it said. The presidency recalled that the European Union had never recognized the annexation of east Jerusalem in 1967 nor the subsequent 1980 basic law. "The actions taken by the Israeli government contravene repeated calls by the international community, including the Quartet, and run counter to the creation of an atmosphere conducive to achieving a viable and credible solution to the conflict between Israelis and Palestinians," continued the statement. "If there is to be genuine peace, a way must be found to resolve the status of Jerusalem as the future capital of two states." Also Wednesday, opposition leader and Kadima chair Tzipi Livni met with French Foreign Minister Bernard Kouchner in Jerusalem and stressed that construction in Gilo needn't be halted. "Gilo is part of the Israeli consensus, and that understanding is important for every discussion on the final borders of any future agreement," she told him. On Tuesday night, senior government sources said that Prime Minister Binyamin Netanyahu was willing to show "restraint" in construction in the West Bank, but would not accept any restriction on building in Jerusalem, following the Jerusalem Municipal Planning Committee's approval of the Gilo plan. Army Radio reported overnight Tuesday that Netanyahu had instructed his government to refrain from making any statements in response to US criticism of the municipal committee's decision. UN Secretary General Ban Ki-Moon joined Western countries in condemning Israel's decision, Army Radio reported. He referred to the sprawling south Jerusalem neighborhood as a "settlement" built on land Israel "conquered from the Palestinians in 1967." "The secretary-general ... believes that such actions undermine efforts for peace and cast doubt on the viability of the two-state solution," UN spokeswoman Michele Montas said. Washington reportedly objected to the plan earlier this week, in a meeting between Mara Rudman, a top aide to US Middle East envoy George Mitchell, and Defense Ministry chief of staff Michael Herzog. The issue was also apparently raised again on Monday at a meeting between Mitchell and Netanyahu's envoy Yitzhak Molcho. White House spokesman Robert Gibbs put out a statement on Tuesday harshly criticizing the decision, saying the US was "dismayed" by the move. "At a time when we are working to relaunch negotiations, these actions make it more difficult for our efforts to succeed," he said in a statement. "Neither party should engage in efforts or take actions that could unilaterally preempt, or appear to preempt, negotiations." His comments included criticism of Israel's "continuing pattern of evictions and demolitions of Palestinian homes," a point the Obama administration has made in the past. In this case, though, the condemnation was primarily leveled at building in a Jewish Jerusalem neighborhood. It is highly unusual for the US to criticize construction in Gilo, a neighborhood straddling the Green Line in the city's south and considered noncontroversial among Israelis. Initially, the White House statement was titled a response to "the approval of settlement expansion in Jerusalem." But the version of the statement the White House later posted on its Web site had different wording. It does not use the word "settlement" in reference to Jerusalem, and is instead titled a comment "on Jerusalem." The British government also slammed the Gilo plan, with a British Foreign Office statement saying that "the foreign secretary has been very clear that a credible deal involves Jerusalem as a shared capital. Expanding settlements on occupied land in east Jerusalem makes that deal much harder. So this decision on Gilo is wrong and we oppose it." Knesset Speaker Reuven Rivlin lashed out on Tuesday against the American demands, saying that "new demands of the type that the Americans are airing now, pushes us toward a red line that we cannot allow ourselves to cross, and is not legitimate. The right to build in all of unified Jerusalem is not questioned in Israel, and this approach, that has directed us for 40 years, has already been coordinated with the international community," Rivlin said during a meeting with Lithuanian Ambassador Darius Degotis. Rivlin's comments were echoed by former housing minister MK Meir Sheetrit (Kadima), who was one of the forces behind building projects in the southeast Jerusalem neighborhood of Har Homa. "The American demands are misguided, and if Israel accepts them, it could constitute the beginning of a principle that would prohibit Israel from building in west Jerusalem altogether. Jerusalem has not been the capital of Israel since Camp David, but rather since King David," Sheetrit told The Jerusalem Post. Sheetrit added that in previous administrations, the Americans had not objected to building throughout east Jerusalem, including in Har Homa, but added that part of America's tolerance for the building may have been due to the fact that, at the time, Israel was involved in active peace negotiations with the Palestinians. "The existing status quo is one in which building is accepted in all of Jerusalem," he said. Rebecca Anna Stoil and Abe Selig contributed to this report.