A new settlement row threatens to overshadow a key speech on the Middle East by US President Barack Obama and Israeli prime minister Benjamin Netanyahu's visit to America.

Har Homa

The settlement of Har Homa on the outskirts of east Jerusalem

Controversial plans to approve 1,608 new homes in east Jerusalem will be discussed as Mr Netanyahu boards a plane to fly to Washington DC.

One plan involves carving into a picturesque hillside overlooking the West Bank town of Bethlehem to create 1,000 new homes for Jewish settlers near to the settlement of Har Homa.

If approved, the development would further disfigure the view of unspoilt hills currently visible from Shepherds' Field outside Bethlehem, visited by thousands of Christians every year.

The other would create more than 600 new homes to the north of Jerusalem, also on land occupied by Israel in 1967.

"This is not a random event. It would have required the consent and knowledge of the prime minister," Jerusalem lawyer Daniel Seidemann told Sky News.

"He has twice asked for the discussions to be postponed but now is allowing it to happen."

Israeli Prime Minister Benjamin Netanyahu

PM Benjamin Netanyahu is visiting Washington DC

The announcement of 1,600 new settler homes in east Jerusalem during the visit of US Vice President Joe Biden in 2010 plunged US-Israeli relations to new icy depths.

In the wake of that fiasco, Israel promised to avoid provocative announcements about building in East Jerusalem.

But these latest plans to be discussed by a Jerusalem planning committee are far more advanced than those back in 2010 - only a step or two short of final approval.

Israel annexed a large area around Jerusalem in 1967 claiming it as part of its "eternal, undivided capital", an annexation not recognised by the international community.

Palestinians want east Jerusalem as the capital of an independent Palestine and regard areas like Har Homa as part of the West Bank.

Under most interpretations of international law it is illegal to build or move populations onto occupied land.

Britain is opposed to all settlement activity in east Jerusalem pending the determination of its final status under any future peace agreement.