Israel has approved a controversial archaeology project in East Jerusalem, the Interior Ministry said Friday, in a move likely to compound tensions threatening to scupper peace talks with the Palestinians.

The ministry “heard objections” from the Palestinians and from residents to the plans to build a visitor centre just outside Jerusalem’s Old City walls in the Arab neighbourhood of Silwan, a statement said.

However it granted approval to the project on grounds that it “will show important archaeological discoveries to the public”.

“As a tourist attraction, this will contribute to the development of the city of Jerusalem,” the ministry added.

The Silwan neighborhood, where the 1,200 square meter (13,000 square foot) complex is to be built, is already home to dozens of Jewish settler families who live under heavy guard among their Arab neighbors.

Arab residents charge that the new visitor center fails to take account of their needs and is an attempt to further strengthen the Jewish presence in Silwan.