(JERUSALEM) -- Israel has approved the construction of 1,600 new homes for Jews in east Jerusalem, threatening to cloud a visit by Vice President Joe Biden.

The Interior Ministry says the units will go up in the neighborhood of Ramat Shlomo, in the part of the city Palestinians claim for a future capital.

Israel has annexed east Jerusalem and refuses to restrict building there. The Palestinians and the international community regard construction there as settlement activity.

The decision comes as Biden is visiting the area to kickstart peace talks. Israel and the Palestinians agreed this week to renew talks after 14 months of deadlock.

A spokesman for Israeli Prime Minister Benjamin Netanyahu said he was unaware of the construction plan.

The announcement of indirect talks, which will be held through a U.S. mediator, marked President Barack Obama's first diplomatic breakthrough in the Israeli-Palestinian conflict. But the new peace push is sure to face enormous challenges, including sharp divisions among the Palestinians and a hardline Israeli government seen as unlikely to make wide-ranging concessions.

Biden said he hoped the beginning of indirect talks would be "a vehicle by which we can begin to allay that layer of mistrust that has built up in the last several years."

"The United States will always stand with those who take risks for peace," Biden said standing beside Israeli Prime Minister Benjamin Netanyahu. He told the Israeli leader, "you're prepared to do that." The appearance, which included warm banter between the two men, ended with Netanyahu telling Biden that trees had been planted outside Jerusalem in honor of the vice president's late mother. "My love for your country was watered by that Irish lady," Biden responded.