It also said that work had started on more than 2,000 settler homes since the end in September of Israel's 10-month freeze on Jewish construction on Palestinian land.

Peace Now made its announcement as Prime Minister Benjamin Netanyahu was in Washington preparing to address the US Congress and a powerful pro-Israel lobby, the American Israel Public Affairs Committee (AIPAC).

It said Barak has also approved building of homes for the elderly and a shopping centre in the settlement of Efrat.

The group could not say exactly when Barak signed off on the projects, although it said it had seen a letter dated April 28 from the defence ministry advising the housing ministry of its decision.

The plans still need local authority permits to build but that is considered a formality, requiring no further government action, Peace Now said.

The defence ministry, contacted by AFP, issued a brief statement saying that "since the end of the freeze period a few building permits have been approved for communities situated in the (settlement) blocs to meet their living needs."

Peace negotiations between Israel and the Palestinians have been on hold since late September, when the partial Israeli settlement freeze expired and Netanyahu declined to renew it.

Peace Now said on Sunday that since the moratorium was lifted settlers had started construction on about 2,000 homes in 75 different settlement sites.

"This construction might create facts on the ground that will make the price of peace much higher for Israel," it said in a statement, adding that one third of the new building was going on beyond Israel's West Bank barrier, which itself regularly cuts into land the Palestinians claim for their future state.

It said that in addition the government had given planning permission to 800 new homes in 13 settlements.

As US President Barack Obama was delivering a key speech on Thursday in which he urged Israel to pull out from land it occupied in the 1967 Six-Day War, a government panel approved more than 1,500 settler homes in annexed east Jerusalem.

Peace Now called that decision "not just miserable timing but a miserable policy" and said it sent a "clear message to the Americans."

The Palestinians have insisted they will not talk while Israel builds on land they want for a future state, and Israel has attracted fierce international criticism for its settlement policy.

Palestinian president Mahmud Abbas has said Israel must choose "between settlements and peace."

But in response to Obama's speech, Netanyahu issued a blunt statement rejecting the pre-1967 lines as a basis for negotiation.

He urged Obama to commit to assurances made by former US president George W. Bush, who said "new realities on the ground" meant a "full and complete return" to the 1967 borders was "unrealistic."

The 1967 borders leave Israel "indefensible," said Netanyahu.

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