Britain has condemned the decision by Israel to build 1,100 more settlement homes in the West Bank.

Foreign Secretary William Hague said the move was not only illegal but undermined the peace process.

“I condemn today’s news that the Government of Israel is advancing plans for 780 new settlement housing units, with an option of an additional 600 units in the East Jerusalem settlement of Mordot Gilo," he said.

This is a time when all parties should be striving to return to talks and responding to the Quartet statement call to refrain from provocative actions.

Settlement expansion is illegal under international law, corrodes trust and undermines the basic principle of land for peace. We call on the Government of Israel to revoke this decision.”

The decision was also criticised by the United States who said it was "deeply disappointed" and the European Union which said the plan “undermines the talks with Palestinians and should be reversed."

The new homes are set to be built in Gilo on the outskirts of Jerusalem.

Last week Palestinian leader Mahmoud Abbas addressed the UN General Assembly as part of a move to gain statehood for Palestine.

In his speech he said settlement activity embodied the "colonial military occupation of the land of the Palestine people."

Israeli prime minister Binyamin Netanyahu defended the construction project in an interview with the Jerusalem Post.

“We plan in Jerusalem. We build in Jerusalem. Period. The same way Israeli governments have been doing for 44 years, since the end of the 1967 war,” he said.