The United States said on Wednesday that continued Israeli settlement building in the West Bank undermines peace efforts and contradicts Israel's obligations.

"We're very clear that continued Israeli settlement activity in the West Bank undermines peace efforts and contradicts Israeli commitments and obligations, including the 2003 road map," State Department spokesman Mark Toner said, in response to the announced building of 300 new homes in the West Bank settlement of Bet El by Israeli Prime Minister Benjamin Netanyahu earlier in the day.

The 2003 road map, initiated by the Quartet of Middle East peace negotiators -- the United States, the European Union, the United Nations and Russia, called on the Palestinians to renounce violence and Israel to dismantle all outposts erected since March 2001 and freeze all construction in other settlements.

"You know, our position on settlements remains unchanged. We do not accept the legitimacy of continued Israeli settlement activity, " Toner told reporters at a regular news briefing.

Dispute over settlement building brought direct talks between the Israelis and the Palestinians to a halt only weeks after they were restarted in Washington in early September 2010.

Netanyahu promised to build more homes in Bet El after parliament killed a bill that would have otherwise legalized five three-story apartment buildings in the Ulpana neighborhood of Bet El near Ramallah. Israel's Supreme Court had ordered their dismantlement as they were built on private Palestinian land.

"You know, we want to see these parties -- both parties, rather, refrain from these kinds of actions and to get back into negotiations," Toner said.

"The larger issue here is that it impedes progress on any kind of comprehensive settlement, and that's ultimately what everyone here, most importantly both sides, both parties, want to see happen, or at least that's what they claim to want to see happen," he added. "And frankly we think that the new coalition in government in Israel offers the best opportunity to move this process along."

Netanyahu is leading one of the largest coalition governments in Israeli history, after former opposition leader and Kadima party chairman Shaul Mofaz agreed to join his government last month.