Israel will build 884 more houses in east Jerusalem , the housing ministry said on Sunday, in a move likely to enrage Palestinians who have demanded it as the capital of their promised state. "After the weekly cabinet session (Sunday) we will invite tenders for the construction of 121 housing units in Har Homa and 763 others in Pisgat Zeev," ministry spokesman said. The two neighbourhoods lie in Arab east Jerusalem , which Israel occupied and annexed after the 1967 war but which the Palestinians have demanded as their capital in recently revived US-backed peace talks. The latest planned expansions come on the eve of the next scheduled meeting between Israeli Prime Minister Ehud Olmert and Palestinian president Mahmud Abbas, who have pledged to try to strike a full peace deal by January 2009.