In a statement released Saturday, the EU said it is "strongly opposed to Israel's settlement policy, including in East Jerusalem, which is illegal under international law and an obstacle to peace."
The statement came after Israel's Housing Ministry this week issued construction tenders for over 800 new housing units in East Jerusalem al-Quds.
"The policy of settlement construction and expansion in East Jerusalem” al-Quds undermines the so-called two-state solution, the statement from EU Spokesperson Maja Kocijancic read, Press TV reported.
About 600,000 Israelis live in over 230 illegal settlements built since the 1967 Israeli occupation of the Palestinian territories of the West Bank and East Jerusalem al-Quds.
The UN Security Council has condemned Israel’s settlement activities in the occupied territories in several resolutions.
The Israeli move comes as the US administration prepares to unveil the first phase of its so-called Middle East peace plan, rejected by the Palestinian leadership, in an economic conference in Manama, Bahrain, on June 25-26.
All Palestinian factions have boycotted the event, accusing Washington of offering financial rewards for accepting the Israeli occupation.
Saudi Arabia and the UAE have said they will send delegations to the Manama forum and Israel’s Finance Minister Moshe Kahlon has said he intends to attend.
The United States has kept the so-called "deal of the century", which it says is aimed at the Israeli-Palestinian conflict, under wraps. Leaked information, however, indicate that it features serious violations of the Palestinian’s age-old demands.