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
Unbridled industrialization with almost no environmental regulation has resulted in the toxic contamination of one-fifth of...
Russia, Ukraine, the US and the European Union have said that all sides have agreed to...
