JERUSALEM (Agencies) - Israel on Friday announced its second settlement project in occupied east Jerusalem this month, enraging Palestinians just ahead of a US visit aimed at rescuing the stalemated peace process. Jerusalem municipality confirmed a report in Haaretz newspaper that the green light had been given for 1,300 new homes for Jewish settlers in the occupied and annexed east of the city. The houses will be built in Ramat Shlomo where there are already 2,000 settler homes, Haaretz reported. The paper said the decision to proceed was taken on Tuesday by the Jerusalem urban planning commission which reports to the interior ministry. According to BBC, Palestinians leaders says the units are in direct contravention of international law and the current peace process. Palestinian negotiator Saeb Erakat expressed outrage at the decision. "We firmly condemn this project which reveals the Israeli government's intention to destroy peace," Erakat told AFP. "The international community must make Israel stop its settlement activity if it wants to give peace negotiations a chance." The new project will nearly double the number of homes in Ramat Shlomo. UN Secretary General Ban Ki-moon also said he was deeply concerned at the move which is "contrary to international law." In Paris on Friday, US President George W Bush said he remained confident a Middle East peace deal could be reached in 2008. "I firmly believe that, with leadership and courage, a peace agreement is possible this year," he said in a speech at the headquarters of the Organisation for Economic Cooperation and Development. In a graphic illustration of the sensitivity of the issue, the BBC has broadcast video footage of what Israeli human rights organisation B'Tselem says was an attack by masked Jewish settlers on a Palestinian shepherd. Police on Friday said an investigation into the alleged attack has been launched, but that they had yet to make arrests. The footage shows men brandishing baseball bats who are alleged to have beaten the elderly shepherd and his wife outside the occupied West Bank town of Hebron. Meanwhile, a Palestinian suffered a severe gunshot wound when troops dispersed a protest against the Israeli separation barrier in the occupied West Bank, medics and witnesses said. The 25-year-old man, who was among a dozen protesters at the weekly demonstration in Bilin, was taken to hospital in nearby Ramallah.