The United States was reportedly surprised by Israel’s approval of construction of 3,000 new housing units in Jerusalem and the West Bank on the heels of last week’s UN General Assembly vote.

The decision, roundly condemned by the Obama administration and by capitals around the world, was seen as a punitive measure for the successful Palestinian upgrade to nonmember observer state status at the UN.

According to The New York Times, senior US officials were particularly frustrated because Jerusalem informed Washington of the decision just hours before the announcement was made public.

Furthermore, Israel had previously downplayed the importance it attached to the Palestinian UN bid, suggesting that retaliatory measures would be taken only if the Palestinian Authority chose to use its upgraded status to bring charges against Israel in the International Criminal Court in the Hague.

On Friday, just one day after the resolution to upgrade the Palestinian status passed the UN General Assembly by an overwhelming majority, Israel said it would approve construction of housing units in the controversial strip of land known as E1. The construction would effectively connect Jerusalem to the nearby settlement of Ma’aleh Adumim, the third-largest settlement in the West Bank.

Plans were also announced to build in the West Bank settlements of Karnei Shomron, Ariel and Giv’at Ze’ev, the Jerusalem neighborhoods of Pisgat Ze’ev and Gilo which lie beyond the Green Line, and the Gush Etzion settlement bloc.

Dan Kurtzer, a former US ambassador to Israel and to Egypt, told the Times the construction plan “is not just another few houses in Jerusalem or another hilltop in the West Bank.” Rather, Kurtzer referred to it as “one of the most sensitive areas of territory, and I would hope the United States will lay down the law.”

Settlement building has long been one of the major sticking points to renewing Israeli-Palestinian peace talks. The Palestinian Authority has demanded a freeze to all construction in the West Bank before it returns to the negotiating table. Jerusalem has repeatedly called on the Palestinians to resume talks without preconditions.

Ma’aleh Adumim is considered part of a bloc of settlements that Israel would seek to retain in any permanent accord.

US National Security Council spokesman Tommy Vietor called Israel’s actions “counterproductive” and said they “make it harder to resume direct negotiations or achieve a two-state solution.”

Secretary of State Hillary Clinton added that the decision would “set back the cause of a negotiated peace.”

Clinton also blasted Thursday’s UN vote on the Palestinian Authority as a “step that will not bring us any closer to peace.”

In Washington, a bipartisan group of senators warned the Palestinians they could lose US financial support of millions of dollars a year and risk the shutdown of their Washington office if they use their enhanced UN status against Israel.

Ron Friedman contributed to this report.