Secretary of State Hillary Clinton Friday sharply rebuked Israeli Prime Minister Benjamin Netanyahu, saying moves to expand a Jerusalem settlement sent "a deeply negative signal" on Israel's ties to the US.

Israel announced Tuesday during an official visit to the country by US Vice President Joe Biden that 1,600 new settler homes would be built in predominantly Arab east Jerusalem.

The announcement sent a "deeply negative signal about Israel's approach to the bilateral relationship," Clinton told Netanyahu in an early morning phone call Friday and was "contrary to the spirit" of Biden's trip.

State Department spokesman Philip Crowley added that Clinton stressed "this action had undermined trust and confidence in the peace process and in America's interest."

It was an unusually strong rebuke from the United States for its main regional ally and came as Israel Friday sealed off the West Bank amid tension in Jerusalem over the plans.

The chief US diplomat told the Israeli leader that "she could not understand how this happened particularly in light of the US strong interest in Israel's security," Crowley added.

And she made clear that "the Israeli government needed to demonstrate not just in words, but through specific actions, that they are committed to this relationship and to the peace process."

Netanyahu on Thursday apologized for the timing of the settlement announcement, made as Biden was holding a day of talks in Jerusalem.

Biden welcomed a clarification that construction would not start for several years, saying this would give negotiators time to tackle the issue, but he also reiterated condemnation of Israel's go-ahead for the project.