Ramat Shlomo in East Jerusalem has emerged as the spark for Palestinian anger, and a diplomatic crisis between Israel and the US.
It is a Jewish quarter in a predominantly Arab area.
And Israel’s green light for 1,600 new Jewish homes in the West Bank has fanned the flames of conflict once more.
The decision came as the US Vice President Joe Biden touched down in Israel for a visit, and just as America was on the verge of persuading the Palestinians to restart indirect peace negotiations with the Israelis a year after stalling.
It put Biden in an embarrassing spot, but according to Eli Yishai, the Israeli interior minister from the ultra-orthodox Shas party, it was just an unfortunate coincidence.
“The regional committee gives initial approval for projects, or approves plans fully, in a regular and continous way,” he said earlier in the week.“The Ramat Shlomo project has been in planning procedures for several years. Today it got initial approval.”
But to Palestinian eyes, there was nothing coincidental about the timing of Israel’s decision to approve Ramat Shlomo’s expansion.
Palestinian spokeswoman Dr Hanan Ashrawi has no doubt. She said: “Israeli deliberate measures at expanding settlement activities, at carrying out further building of illegal settlements in and around Jerusalem, all these are designed to scuttle all American efforts at trying to relaunch any kind of talks.”
Under the 2003 Roadmap for Peace, Israel must freeze all expansion of Jewish settlements, a position initially supported by President Obama.
But in October, Washington reviewed its position and relaxed its demands.
Secretary of State Hillary Clinton said: “What the Prime Minister (Netahyahu) has offered in specifics of a restraint on the policy of settlements, which he has just described, no new starts for example, is unprecedented in the context of prior to negotiations.”
A few weeks later, in November, the Israeli government announced a partial freeze on the enlargement of settlements with a view to resurrecting the peace talks.
“Today my cabinet authorised a policy of restraint regarding settlements,” Netanyahu said, “which will include a suspension of new permits and new construction in Judea and Samaria for a period of 10 months.”
Just to show his discontent over the latest Ramat Shlomo announcement Joe Biden made his host wait for an hour and a half before turning up at a private dinner on Tuesday.
But even if the Israeli Prime Minister apologised for the inopportune timing, east Jerusalem does not fall with the zone of settlement freeze he announced in November.