The interior ministry confirmed the new construction, amid reports that Mr Netanyahu had turned down a direct request from Washington's envoy, George Mitchell, to halt the programme.
The Israelis claim that the settlement, Gilo, is now part of Jerusalem, which it has always said would not be included in any freeze that might be agreed to facilitate talks.
Gilo already houses 40,000 Israelis.
Israel approves 900 more settler homes
Prime Minister Benjamin Netanyahu is facing growing criticism in Israel for a planned speech to the...
An Egyptian appeals court on Monday convicted a doctor of manslaughter and performing female genital mutilation...
