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Prime Minister of Israel Benjamin Netanyahu addresses the 69th session of the United Nations General Assembly September 29, 2014 at the United Nations in New York.DON EMMERT/AFP / Getty Images

Israel's Prime Minister pledged Monday to keep building in East Jerusalem, despite stiff international criticism and recent rising tensions between Jews and Arabs in the city.

Earlier in the day, Prime Minister Benjamin Netanyahu's government said it was advancing construction plans to build about 1,000 housing units in East Jerusalem, the part of the city the Palestinians demand for their future state. Speaking to parliament, the Knesset, Mr. Netanyahu defended the stance, saying there was a wide consensus in Israel to continue building throughout the city, just as every Israeli government has done since Israel captured East Jerusalem in 1967.

"Even the Palestinians know that these places will stay in Israeli sovereignty under any agreement," he said. "The French build in Paris, the English build in London and the Israelis build in Jerusalem. To come and tell Jews not to live in Jerusalem – why?"

East Jerusalem is home to the city's most sensitive Jewish, Christian and Muslim holy sites. Israel says the whole city will forever be its capital, citing historical, religious and security reasons. The international community, including the United States, does not recognize Israel's annexation of the eastern sector of Jerusalem.

The Palestinians seek East Jerusalem as their future capital and oppose any Israeli construction there. Palestinian protesters have been clashing regularly with Israeli security forces in East Jerusalem for months, and violence has particularly risen in recent days at a key Jerusalem holy site.

In a bid to bolster claims in Jerusalem, the Palestinian prime minister paid a rare visit to the Dome of the Rock on Monday. At the shrine on a hilltop compound revered by both Jews and Muslims, Rami Hamdallah declared that "there will not be a Palestinian state without East Jerusalem as its capital."

The visit was co-ordinated with Israeli security and passed without incident.

Mr. Netanyahu has accused Islamic elements and Palestinian president Mahmoud Abbas of inciting violence by spreading rumours about a pending change of status atop the sensitive site. He says there is no truth to the rumours.

Mr. Netanyahu did, however, stand behind the construction plans for Jewish areas in the eastern part of the city.

A government official briefed on the latest construction plans said the building would take place in Har Homa and Ramat Shlomo, two sprawling areas that are already well developed. He said the project would also include new infrastructure in the West Bank.

The official, speaking on condition of anonymity because the plan is not yet official, would not say when construction would begin. Mr. Netanyahu has been under heavy pressure from the U.S. and other Western allies not to expand settlement construction, and the latest pledge appeared to be aimed in part at appeasing hawkish coalition partners at a time when his government is under internal duress.

Still, the housing announcement could flare already soaring tensions in East Jerusalem.

Tensions have been high since June, when three Israeli teenagers were abducted and killed by Palestinian militants in the West Bank. Israeli extremists retaliated by abducting and killing a Palestinian teenager in East Jerusalem, sparking riots. The abductions set off a chain of events that led to the 50-day Gaza war.

Last week, a Palestinian drove his car into a Jerusalem train station, killing a three-month-old Israeli-American baby girl, Chaya Zissel Brauna, and wounding several other people. On Sunday, a 22-year-old Ecuadorean woman, Karen Yemima Mosquera, also died of her wounds sustained in that attack.

The car's driver, identified as Abdel Rahman al-Shaludi, was a Palestinian from East Jerusalem who had served time in prison for militant activities. He was shot by police as he tried to run away and later died from his wounds.

In a related development, Israel's Channel 10 TV reported on Monday that another contentious building plan announced during Mr. Netanyahu's visit to Washington several weeks ago was now moving forward with the marketing of apartments in Givat Hamatos. The plan still has several hurdles to clear and actual construction is still years away.

U.S. State Department spokeswoman Jen Psaki said the U.S was "deeply concerned by the reports" from Israel.

"We view settlement activity as illegitimate and unequivocally oppose unilateral steps that prejudge the future of Jerusalem," she said.

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