JERUSALEM - Israeli plans to build 1,500 new settler homes in response to the formation of a Palestinian government backed by Hamas sparked angry demands from its leaders Thursday for ‘serious’ action from Washington. The plans were unveiled by the Israeli housing ministry overnight, just 48 hours after the swearing in of the Palestinian unity government of technocrats, backed by Israel’s Islamist foe. Of the new homes, 400 will be in Israeli-annexed east Jerusalem and 1,109 elsewhere in the occupied West Bank.The housing ministry described the settlement push as a ‘fitting Zionist response’ to the new Palestinian cabinet, which Israel has vowed to boycott even though both the European Union and the United States have expressed readiness to work with it. ‘I welcome the decision to give a fitting Zionist response to the establishment of the Palestinian government of terror,’ said Housing Minister Uri Ariel, himself a settler and the deputy head of the far-right Jewish Home party. ‘I believe these tenders are just the beginning.’ The announcement came after the new Palestinian government took office on Monday ending seven years of rival administrations in the West Bank and Gaza. Israel has vowed to have nothing to do with the ‘government of terror’ which is backed by an Islamist movement whose charter calls for its destruction. News of the new settler homes came on Naksa Day when the Palestinians commemorate Israel’s seizure of the West Bank, including Arab east Jerusalem, in the Six-Day War of 1967. It was the first concrete Israeli response to the new Palestinian cabinet and comes after several days of angry rhetoric. The Palestinian reply was no less furious with warnings of an ‘unprecedented’ response from their new government. ‘It is time for the American administration to take serious steps against what the government of Israel is doing,’ said Nimr Hammad, an adviser to president Mahmud Abbas. ‘We strongly condemn this decision which affirms that Prime Minister (Benjamin) Netanyahu is a liar and is not interested in the two-state solution. ‘Netanyahu wants to push the Palestinians into one of two options: either a confrontation, or an internationalisation of the conflict - pushing the Palestinians to go to the United Nations.’ Abbas’s spokesman Nabil Abu Rudeina said Israel’s settlement policy was ‘unacceptable’ and warned of a harsh response from the new government. ‘The Palestinian leadership will respond in an unprecedented way to this step,’ he said. Chief negotiator Saeb Erakat accused Israel of using Palestinian reconciliation as an ‘excuse to continue the colonisation of Palestine’ and said Netanyahu’s government appeared to be on the verge of a ‘major escalation’ in the territories. ‘We believe this latest announcement is a clear sign that Israel is moving towards a major escalation, such as new settlement construction, the annexation of occupied territory and forcible transfer,’ he said. Since Monday, several hardline ministers have called for Israel to respond to the new government by annexing large swathes of the West Bank. In a speech at the weekend, Abbas acknowledged Israel would seek to ‘punish’ the Palestinians for agreeing on a government with Hamas, but warned there would be an answer for every Israeli move. ‘Each Israeli step will have a proper Palestinian response,’ he said in what appeared to be an allusion to Palestinian plans to seek further international recognition for their promised state.In Israel, settlement watchdog Peace Now accused Netanyahu of buying into the extremist agenda of the pro-settler lobby and looking for any excuse ‘to extend settlement instead of promoting the two-state solution’. ‘This a very bad news for the future of the two-state solution,’ Peace Now head Yariv Oppenheimer told AFP.