Israel's latest move to build some 900 units in the capital's Gilo neighborhood complicates administration 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 does not make Israel safer. He said such moves make it harder to achieve peace in the region, and embitters the Palestinians in a way that he said could be very dangerous. On Tuesday night, senior government sources said that Prime Minister Binyamin Netanyahu is willing to show "restraint" in construction in the West Bank, but will 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 Tuesday overnight. 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." One senior government official said that Netanyahu was "willing to show the greatest possible restraint concerning building in the territories, and has even received praise for that restraint. But that is in the West Bank. Gilo is in Jerusalem, and that is the capital." The officials said that while the prime minister has made clear he would accept a temporary moratorium on new housing developments in the West Bank to facilitate the relaunch of negotiations with the Palestinians, he would not place any limitations on building in 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." Palestinian Authority negotiator Saeb Erekat said there was no point in talking peace while Israel was expanding neighborhoods in east Jerusalem. "We condemn this in the strongest possible terms," Erekat said Tuesday. "It shows that it is meaningless to resume negotiations when this goes on." 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. Jerusalem Mayor Nir Barkat said that he refused to be part of a halt to Jewish or Arab construction in west or east Jerusalem. "Israeli law does not discriminate between Arabs and Jews, or between east and west of the city," he said in a statement. "The demand to cease construction just for Jews is illegal, also in the US and any other enlightened place in the world." "It is inconceivable that the US government would demand a construction freeze in the US based on race, religion or sex, and the attempt to demand this from Jerusalem constitutes a double standard and is unacceptable," continued the statement. "The Jerusalem Municipality will continue to enable construction in every part of the city for Jews and Arabs alike." Rebecca Anna Stoil and Abe Selig contributed to this report.