REPUBLIKA.CO.ID, JERUSALEM -- Rebuffing international criticism, Israeli Foreign Minister Avigdor Lieberman told his German counterpart point-blank on Sunday that Israel will not stop building homes for Jews in East Jerusalem. His remarks were likely to compound Western frustration over Israeli settlement policy on occupied land that Palestinians seek for a state.

"We won't accept any limitations on building in Jewish neighbourhoods in Jerusalem," Lieberman told a joint news conference with German Foreign Minister Frank-Walter Steinmeier.

Since the start of October, Israel has advanced building plans for some 4,300 homes on West Bank land annexed to Jerusalem, heightening tensions in a city which is already on edge following confrontations over access to a renown holy site. The slew of construction announcements have angered the European Union and the United States, which deem Israeli enclaves on occupied land as illegal and an obstacle to peace.

Palestinians want East Jerusalem to be the capital of the state they aspire to establish in the West Bank and Gaza Strip -- areas captured by Israel in a 1967 war. Israel quit the Gaza Strip in 2005, but blockades the Hamas Islamist-ruled enclave. Israel considers all of Jerusalem as its united capital, a claim that is not recognised internationally, and an estimated 150,000 Jews live in East Jerusalem.

"Whoever dreams the Israeli government will surrender and limit construction in Jerusalem is mistaken," said Lieberman, who himself lives in a West Bank settlement.

"We are ready to defend our independence, our sovereignty, and there won't be any compromise. I think any pressure here will be very, very negative and very counterproductive."

Steinmeier said the establishment of an independent Palestinian state was the only solution to the decades-old conflict. Palestinians fear settlements will deny them a viable and contiguous country.

European officials have said they are looking at new ways to halt settlement building. Discussions are at an early stage, but officials say the European Union, Israel's biggest trading partner, may look at stopping settlers from visiting the EU and could examine the fine print of a free-trade agreement.

Asked about Lieberman's remarks, Nabil Abu Rdeineh, a senior aide to Palestinian President Mahmoud Abbas, said settlement building in East Jerusalem was illegal.

"We ask the international community, especially the United States and the EU to stop this Israeli escalation," he said. 

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