An Israeli official says the government will decide next month whether to give final approval for 1,500 new housing units in Jewish enclaves in disputed east Jerusalem.

Roi Lachmanovich's announcement Tuesday draws new spotlight on the controversial issue. An approval would further distance prospects for restarting Israeli-Palestinian peace talks.

Israeli construction in east Jerusalem is contentious because Palestinians want the area for their future capital. Israel annexed the territory after capturing it in 1967.

Israel says east Jerusalem developments are merely neighbourhoods of the city, but the international community considers them illegal settlements.

Lachmanovich, a spokesman for Interior Minister Eli Yishai, says the new housing is to be built in two existing enclaves.