Settlers are illegally building 27 mobile homes in the West Bank settlement of Eli with the knowledge of the government, officials said Wednesday, despite Israel's pledge to abide by an internationally endorsed peace plan that calls for a halt to all settlement activity. The construction in Eli, 10 kilometers south of Nablus, is the latest Israeli building project to fuel friction with the Palestinians as the two sides try to end their decades-old conflict. Peace talks resumed in late November after a seven-year breakdown. The trailers stand on a rocky, wind-swept hill in this settlement of 3,000, established almost 24 years ago. Buckets of paint and piles of drywall, ceramic tiles and cinderblocks, protected by blue plastic sheeting, were stacked up on the dirt road outside, as workers toiled to get the trailers ready for people to move in. Settlement director Dovi Odeser insisted the new homes, funded by private Israeli and foreign investors, were being built within an existing neighborhood under an approved zoning plan. "We did not deviate in any way," Odeser said. But Capt. Zidki Maman, spokesman for the IDF unit that oversees civil affairs in the West Bank, said that was not true. "There's no zoning plan there. There's no building permit," he said. The Defense Ministry, which oversees all settlement activity, is aware of the illegal construction and "is working on it," he said. "In the end, all illegal building is taken care of," Maman said. He declined to say whether the trailers will be dismantled. "I don't want to predict how it will end," he said. Last week, The Associated Press reported similar unauthorized settlement activity in Maskiot in the northern Jordan Valley. The military has issued orders to raze seven homes that were built illegally, Maman said. He had no information on when the demolition might be carried out. The renewed peace talks, launched at a US-hosted conference last November, are based on the 2003 "road map" peace plan, which obliges Israel to cease all settlement building. Palestinian officials have repeatedly claimed that construction in settlements is undermining the talks. Prime Minister Ehud Olmert has announced a partial construction freeze, saying no new settlements will be built. But he has permitted construction in existing settlements to continue. "The situation on the ground is deteriorating," Palestinian negotiator Saeb Erekat told a news conference Wednesday, a day after Olmert and Palestinian Authority President Mahmoud Abbas held their latest in a series of regular meetings. Asked about the construction in Eli, Olmert spokesman Mark Regev said the government "is committed to its obligations on the issue of settlement." "There will be no new settlement construction, and there will be no outward expansion of existing settlements," Regev said. He did not say what action, if any, would be taken in Eli.