Deputy Foreign Minister Danny Ayalon hinted Tuesday that Israel may increase construction in eastern Jerusalem and the "settlement blocs" following the expected unilateral diplomatic move by the Palestinian Authority. He added that "If they are going to brazenly and independently declare a state, that cancels the agreements with us."

"Israel reserves the right to change the status of the territories, if the Palestinians decide to unilaterally declare a Palestinian state," said Ayalon in Be'er Sheva.

"It is not unreasonable to reconsider the attitude toward the territories that will be under our sovereignty in any case, like  eastern Jerusalem and the large settlement blocs. We can give a boost to settlement in those places," he said.