Jerusalem today
Jerusalem today Israel news photo: Flash 90

A spokesman said Thursday that Interior Minister Eli Yishai has given final authorization to build 1,600 apartments in Greater Jerusalem and will approve 2,700 more in the coming days. 

Ministry spokesman Roi Lachmanovich said Thursday that Prime Minister Binyamin Netanyahu's office knew the construction plans were moving ahead. 
Israeli construction in Jerusalem is likely to rile the Palestinian Authority, that claims it as its future capital, but Israel -- that has exercised de jure sovreignty in the city since 27 June 1967 -- has said it will remain the undivided and eternal capital of the Jewish state.
In 2010 the Knesset passed legislation giving Jerusalem the highest national priority status in Israel. The law prioritized construction throughout the city, and offered grants and tax benefits to residents to make housing, infrastructure, education, employment, business, tourism, and cultural events more affordable.
Some analysts say the move will also likely hurt Washington's efforts to dissuade the PA from seeking statehood at the United Nations next month, but Israeli officials have said they do not believe an intransigent PA dead set on unilateral moves will drop the bid under any circumstances.
Despite bellicose declarations from US officials, Israeli construction in 'disputed territories' has never resulted in a material rift between the two nations.