As Israel was set to release the first wave of Palestinian prisoners as part of its deal to start peace talks, Housing and Construction Minister Uri Ariel announced on Sunday tenders for hundreds of new housing units in Jerusalem and Judea and Samaria.

"The decision is timely from both a Zionist and economic perspective," said Ariel. "The government is working to lower the cost of living in every part of Israel. No other nation on the planet accepts diktats from other countries on where it can build and where it can't. We're going to continue issuing tenders for apartments and we're going to build all over Israel, according to our citizens' needs."

According to the new tenders, 400 housing units were up for sale in Gilo, 210 housing units in Har Homa and 183 units in Pisgat Zeev. And in Judea and Samaria, 117 units were for sale in Ariel, 149 in Efrat, 92 in Ma'aleh Adumim and 36 in Beitar Illit. 

Activists on the Left and Knesset members protested the housing minister's announcement. Finance Minister and Yesh Atid Chairman Yair Lapid called it an "error."

"Announcing these tenders at the current time is an error twice over. The use of resources for housing meant for the middle class in order to show unnecessary defiance against the Americans, and impede peace talks, is neither right nor helpful to the process," said Lapid.

Yesh Atid faction chairman MK Ofer Shelah said the government was teetering between its commitment to the peace process and its desire to continue developing settlements beyond the pre-1967 borders.

"Instead of courageously admitting what's already clear to every Israeli citizen -- there won't be a permanent accord [with the Palestinians] without a withdrawal to the June 4, 1967 borders, with minor border adjustments and land swaps -- the government prefers to zigzag between morally questionable measures and the expansion of settlements, which the major obstacle to any agreement," said Shelah.

Opposition member Shelly Yachimovich said the announcement of new tenders in West Bank settlements was an international affront.

"Netanyahu has to decide in advance what kind of government he wants to lead -- one that is aiming for a diplomatic agreement or one that wants to shoot down any possibility of reaching such an agreement. Ariel's announcement is a finger in the eye of the U.S., Europe, the Arabs and the vast majority of Israelis who long for peace."

Deputy Knesset Speaker Ofer Akunis (Likud) claimed the new tenders were unrelated to the current round of peace negotiations, which were set to continue this week in Jerusalem.

"Building is not an act of defiance, and is unrelated to negotiations being conducted with the Palestinians. It is our natural right to build in every inch of the land of Israel," he said.

Economy and Trade Minister Naftali Bennett -- whose Habayit Hayehudi party garners much of its base among West Bank Jewish settlers -- said the tenders Ariel announced should be sold and developed "unapologetically."

"[Palestinian chief negotiator Dr. Saeb] Erekat said it was forbidden for us to build in our capital, Jerusalem. The question now isn't why we are building in Jerusalem at the current time. Rather, the question is why we haven't been building until now. We are going to keep fighting to build in our country, unapologetically," Bennett said.

Jerusalem Mayor Nir Barkat on Sunday welcomed the government's decision to extend government tenders for 800 new housing units throughout the capital.

"New construction in Jerusalem is necessary for the development and strengthening of the city, and gives young people the chance to live and buy homes here," he said.

Jerusalem city councilwoman Laura Wharton, who attended a cornerstone laying ceremony in the Armon Hanatziv neighborhood in the city along with Barkat and Ariel, said she was opposed to "selling new apartments on Palestinian territory."

Still, the housing minister said building new homes for Israelis in Jerusalem and Judea and Samaria would continue.

"Let it be clear, this project is just the beginning, and this song can't be stopped. No country would allow someone else to dictate where, when and how to build [housing]," he said.

The Palestinian Authority responded aversely to the news. Mohammad Shtayyeh, a senior Palestinian negotiator, condemned the announcement, saying the timing was not coincidental.

"It's a slap in the face to the U.S. and their efforts. The move proves how little Israel is interested in peace," he said.