Defiant Israel poised to build on land claimed by the Palestinians

The building is seen as an attempt by prime minister Benjamin Netanyahu to make up for the prisoner release, for which he has been sharply criticised at home. The Palestinian prisoners were jailed for deadly attacks on Israelis.

Four projects are being promoted, including 1,500 homes in Ramat Shlomo in east Jerusalem and the development of an archaeology and tourism site near Jerusalem’s sensitive Old City.

The release of 26 Palestinians after midnight on Tuesday was the second of four prisoner releases meant to restart Israeli-Palestinian talks in an effort to reach a final agreement between the two.

The Palestinians had long refused to resume peace negotiations with Israel unless it ends construction in territories that Palestinians seek for their state. Israel refused, insisting that settlements and other core issues, including security, should be resolved through negotiations.

The prisoner release was part of an agreement brokered by US Secretary of State John Kerry, which brought Israel and the Palestinians back to the negotiating table after a five-year hiatus. The talks had been paralysed since 2008.

Earlier this year Mr Kerry managed to persuade Palestinian president Mahmoud Abbas to drop the settlement issue as a condition for restarting negotiations. In exchange, Israel agreed to the prisoner release.

In all, 104 Palestinian convicts are to be released in four rounds over the coming months.

The new east Jerusalem building plan angered the Palestinians but it was not clear if it would directly impact the talks, which are taking place behind closed doors as both sides had agreed.

Thousands of Palestinians have been held in Israeli prisons since Israel’s capture of the West Bank, Gaza and east Jerusalem in the 1967 Middle East war, many jailed on charges ranging from throwing stones to killing civilians in bombings, shootings and other attacks. The Palestinians want those territories for their future state. The prisoners released in the latest batch were all held by Israel for murder.

Israel has a long history of lopsided prisoner exchanges with its Arab adversaries.

But this week’s release appeared especially charged because Israel is receiving little in return except for the opportunity to conduct negotiations that few people believe will be successful.

In the West Bank and Gaza thousands celebrated as they welcomed the released prisoners. Mr Abbas greeted them at a ceremony in Ramallah.

The fate of the prisoners is a deeply emotional issue in Palestinian society.

After decades of fighting Israel, many Palestinian families have had a member imprisoned and the release of prisoners has been a long-standing demand. Israelis mostly view them as terrorists because of the Palestinians attacks on Israelis including civilians.

Many of the killings occurred before the beginning of Israeli-Palestinian peace talks in 1993.

Some 50 Israelis protested outside the West Bank prison where the inmates were held ahead of the release. They held signs reading “death to murderers” and burned keffiyehs, traditional Palestinian headscarves. Over a thousand people demonstrated against the release on Monday.