The leaders of seven countries, including four EU member states, condemned a major settlement project in the West Bank and called on Israel to end expansion in the occupied Palestinian territory after authorities opened bidding for more than 1,200 homes in the area.

"At a time of grave instability in the West Bank with unprecedented levels of violence by settlers against civilians, and serious restrictions on the Palestinian economy, this decision is even more concerning," the joint statement said, urging Israel "to retract these plans immediately and end its expansion of settlements in the West Bank."

The statement was signed by France, Germany, Italy and the Netherlands as well as the United Kingdom, Norway and Canada.

The E1 plan was green-lit by Israel last year and would further separate east Jerusalem, occupied and annexed by Israel and predominantly inhabited by Palestinians, from the West Bank.

The UN secretary general also said the E1 plan posed an "existential threat" to a contiguous Palestinian state.