Observers have said that a decision to demolish 22 Palestinian homes in East Jerusalem could lead to increased friction between Israel and the United States.

The Los Angeles Times has reported that the Jerusalem City Council, in a Monday decision the Palestinian Authority called "unacceptable," approved a controversial development plan to demolish the houses in Arab neighborhoods.

The newspaper further said that the approval could renew friction with the Obama administration, which has repeatedly asked Israel to refrain from such projects in Arab-dominated neighborhoods for fear they could jeopardize American-brokered Israeli-Palestinian peace talks.

U. S. Embassy spokesman Kurt Hoyer has said, "We are urging all sides to refrain from any unilateral actions that seem to prejudice the outcome of final-status peace talks. Jerusalem is a final-status issue."

Israel has downplayed the impact of the decision, saying it believes Palestinian opposition to the project could be overcome.

Government spokesman Mark Regev said, "This is a preliminary planning process that leaves more than enough time to continue with the dialogue between the municipality and local residents."

The Palestinian Authority, which hopes to eventually make East Jerusalem the capital of a Palestinian state, condemned Monday's council action.

According to spokesman Ghassan Khatib, "I believe this decision is bound to have an impact on the peace talks." (With Inputs from Agencies)