Israeli Prime Minister Benjamin Netanyahu said on Monday Israel would not suspend building in East Jerusalem despite damaging ties with the United States and hampering Mideast peace efforts.

Palestinian authorities recently agreed to hold indirect talks with Israel mediated by the United States after a 15-month break, but peace hopes were thwarted after the Israeli government announced last week plans to build 1,600 new housing units in East Jerusalem, which has prompted strains in U.S.-Israeli relations.

"Construction in Jerusalem - and anywhere else - will continue as has been the custom during the past 42 years," Netanyahu was quoted as saying by Israel''s Ynetnews service during a parliament meeting.

He added that the Israeli government would resume building in the West Bank upon the expiration of the 10-month moratorium on settlement construction announced in November 2009.

"The cabinet''s decision to end the construction freeze after ten months remains standing," he said.