Israel Construction and Housing Ministry is seeking bids for construction of about 700 new apartments in East Jerusalem, a ministry spokesman said on Monday.

The tenders will include 692 housing units in three Jewish communities in East Jerusalem, the spokesman told Xinhua, adding that the construction of the new homes is expected to be finished in two or three years.

Jewish neighborhoods in East Jerusalem, captured by Israel in 1967 and later annexed, are considered by international community as Israeli settlements and one of the main obstacles to Israeli- Palestinian peace process.

Israeli Prime Minister Benjamin Netanyahu announced a 10-month freeze on construction in the West Bank settlements last month. However, Netanyahu stressed that the construction limits would not be implemented in predominantly Arab East Jerusalem.

Israel deems Jerusalem as its indivisible capital, while the Palestinians want the east section of the holy city as capital of their future state.

The Palestinians has vowed that they will not return to the negotiation table unless Israel totally freezes its construction activities of Jewish settlements in the West Bank as well as in East Jerusalem.

The new construction plan in East Jerusalem will also be regarded as an embarrassment to the US administration which, for nearly the past whole year, demands Israel to totally freeze its settlements construction for reviving the peace talks with the Palestinians.

However, Israel's Ambassador to the United States Michael Oren Sunday told local daily The Jerusalem Post that he does not think US President Barack Obama has given any real "physical" pressure on Israel, denying there is a crisis in the relations between the two countries.