His fury was directed at Bibi Netanyahu's government for giving the green light to the new homes in the settlement of Adam, north of Jerusalem.

They will house settlers expected to be evacuated from the nearby unauthorised Migron outpost, near Ramallah.

Israel intends to remove about 200 people from Migron and re-house them in Adam.

"Settlements are illegal under international law and they are a major blockage to peace in the Middle East on the basis of a two-state solution," Miliband told the Commons.

"Granting permission for 50 new housing units at the Adam settlement is something that we completely deplore."

Miliband said it was "the worst possible time" for new settlements to be initiated or for construction to be started.

"We are at an absolutely vital moment as the new American admin-istration comes to a decision about how it will prosecute its commitments to a two-state solution," he added.

There is an overall masterplan for the construction of 1,450 homes in Adam - a move that runs counter to a demand by the US that Israel stops all settlement activity on "occupied" Palestinian land.

News of the latest approval came hours before Defence Minister Ehud Barak flew to the US, expecting anger for opposing American policy.

He emerged from a four-hour meeting with US Middle East envoy George Mitchell in New York without any agreement on settlement construction, but optimistic the two sides could "zoom out" of the settlement issue and focus on the wider regional diplomatic initiative.

"I don't think we are stuck," Barak said after meeting Mitchell.

He added that the talks were "positive" although there were still differences.

And later he told Israeli Radio that the two sides were close to a compromise.

Asked whether Israel would offer a temporary halt to settlement activity, of three to six months, Barak said it was "a little bit too early to predict".

Palestinian leader Mahmoud Abbas has said peace talks cannot resume until settlement construction in Palestinian territories comes to a complete halt.

"We are considering every positive contribution Israel can make towards the taking off of a significant, important peace effort," Barak told reporters.

He said it was important to look at "the wider picture and to deal with each and every issue including the settlements".

He went on: "We think this wider framework is needed to enable a full-fledged regional peace process and a promising Palestinian-Israeli track as well as other tracks taking off successfully."