JERUSALEM — The Jerusalem municipality has approved 20 new apartments for Jews in an Arab neighborhood of east Jerusalem, the city said Wednesday, in a move that could stir a new diplomatic crisis with the United States just as Israel's leader is in Washington on a fence-mending visit.

The announcement marked the second time this month that Israel has announced new construction in the disputed section of the holy city during face-to-face meetings between top U.S. and Israeli officials.

There was no immediate American reaction. But Israeli lawmaker Eitan Cabel accused Prime Minister Benjamin Netanyahu of unnecessarily provoking the U.S.

"Is this another 'unfortunate' mistake? Is this another 'misunderstanding?'" said Cabel, a member of the Labor Party, which sits in the governing coalition.

"Netanyahu decided to spit into Obama's eye, this time from up close. He and his pyromaniac ministers insist on setting the Middle East ablaze."

The U.S. views Israeli building in east Jerusalem, the part of the city claimed by Palestinians as their future capital, as disruptive to Mideast peacemaking. Israel, which captured east Jerusalem in the 1967 Mideast war, insists the city cannot be divided and says it has the right to build anywhere.

These differences erupted into a crisis earlier this month when Israel announced during a visit by Vice President Joe Biden that it plans to build 1,600 new apartments for Jews in east Jerusalem.

Israel has apologized for the poor timing of the announcement but rejected calls to cancel the project. In Washington this week, Netanyahu reiterated his tough stance, telling a pro-Israel audience that Israel was determined to keep building in all of Jerusalem. The statement was quickly rejected by the U.S.

Netanyahu met with President Barack Obama on Tuesday in an attempt to defuse what has become the countries' worst spat in decades. But the latest announcement, confirmed Wednesday, by Jerusalem city officials threatened to derail any progress. In Washington, Netanyahu spokesman Mark Regev had no comment on the approval for the new building project.

Netanyahu's talks with Obama administration officials were scheduled in continue today.

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