Israel thumbs its nose at US calls for a halt in settlement work, saying that it has every intention to expand its settlements on occupied Palestinian land.

Tel Aviv locked horns with its close ally Washington on Thursday after US Secretary of State Hillary Clinton made clear that the Israeli leadership should put a stop to its settlement expansion in east Jerusalem (al-Quds) and the West Bank.

Israeli government spokesman Mark Regev said Thursday that "normal life" would be allowed to continue inside existing settlements, which included new construction and the enlargement of homes and the construction of schools to accommodate growing families.

"In the interim period, we have to allow normal life in those communities to continue," he said, adding that the fate of the settlements should be decided in peace negotiations with the Palestinians.

Netanyahu, who opposes Israel-Palestinian peace talks, has repeatedly called for the "mass deportations of Arabs from the territories", vowing to expand illegal Jewish settlements in the West Bank.

Jewish settlements are built on lands that Israel occupied in the 1967 Middle East war and are in violation of the Fourth Geneva Convention, which prohibits the occupying power from transferring its citizens to occupied lands.

A leaked report on Jewish settlements in the West Bank revealed Thursday that the Israeli government was complicit in illegal construction on private land owned by Palestinians.

Israeli human rights group Yesh Din said the confidential information would help Palestinians sue Tel Aviv for "systematically violating international law and the property rights of Palestinian residents."

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