U.S. Vice President Joe Biden Wednesday said Washington supports Palestinians in building their institutions for a "viable" Palestinian state.

The United States "strongly supports the Palestinian (National) Authority's efforts to build its institutions and the develop the economy of the state," Biden told a joint news conference with Palestinian President Mahmoud Abbas in Ramallah, referring to Palestinian Prime Minister Salam Fayyad's two-year state building plan.

Biden arrived in the West Bank on Wednesday and met Fayyad before talks with Abbas. On Tuesday, he held talks with Israeli leaders as the Israeli government announced plans to build more settlements.

Biden said Israel and the Palestinians "should build an atmosphere to support these negotiations, and not complicate them. "

Israel made its decision a few days after the Arab League (AL) and the Palestine Liberation Organization (PLO) approved a U.S. offer to begin indirect proximity talks between Israel and the Palestinians after a 15-month stop.

Biden said Washington "will hold both sides accountable for any statements or actions that enflame tensions or prejudice the outcome of talks," noting that the building of the new settlements did inflame the situation.

For his part, Abbas said Israel's new settlement buildings threaten proximity negotiations.

Abbas also urged Israel not to miss the chance of making peace.

Meanwhile, Abbas called for lifting the Israeli closure on the Gaza Strip, and Biden agreed with him saying that "we must find a way to improve the lives of Gazans."