Ramallah, Jul 12 (IANS): Palestine has rejected an Israeli plan to build 450 new settlement units in East Jerusalem, saying the plan has disregarded the countries that support the two-state solution.

Israel's plan is "disregarding the countries that reject the settlement," the Palestinian Foreign Ministry said on Tuesday in a press statement, adding the plan "aims to separate Palestinian neighbourhoods, towns and communities in Jerusalem from each other".

Earlier on Tuesday, the Israeli Haaretz newspaper reported that Israel is advancing a plan to build 450 housing units for Jews in East Jerusalem.

The plan for a new Jewish neighbourhood between the Palestinian villages of Umm Lisan and Jabal Mukkaber in East Jerusalem is being pursued by a real estate company run by a right-wing activist, according to the report.

"The Israeli government is racing against time in implementing its expansionist map of interests at the expense of the Palestinian land and deepening the annexation of Jerusalem," the Ministry said in a press statement.

"These plans also aim at imposing Israeli law on East Jerusalem and separating it from its Palestinian surroundings," it added.

It accused the Israelis of sabotaging and undermining any opportunity to implement the principle of the two-state solution and to "establish a viable, sovereign, and geographically contiguous Palestinian state with East Jerusalem as its capital".

The Israeli settlement issue is the most prominent aspect of the Palestinian-Israeli conflict and one of the main reasons for the breakdown of the US-sponsored peace talks in March 2014, Xinhua news agency reported.

The Palestinians demand the establishment of an independent state alongside Israel on all Palestinian territories occupied by Israel in 1967, including the West Bank and Gaza Strip, with East Jerusalem as its capital.