The United States has accused Israel of a betrayal of trust over its plans to build hundreds of new settlement homes deep in the occupied West Bank.

In unusually strong statements on Wednesday, the White House and State Department lashed out at a proposal announced last week to build as many as 300 housing units and establish an industrial zone in Palestinian territory.

"The actions of the Israeli government in announcing this settlement undermine the pursuit of peace," White House spokesman Josh Earnest said.

He added that the US had received public assurances from the Israeli government that contradicted the settlement announcement.

"I guess, when we're talking about how good friends treat one another, that is a source of serious concern as well," he said.

Military aid deal

The US signed a record $38bn deal to provide Israel with military assistance over a 10-year period last month - the largest such agreement ever by the US with any country.

At the State Department, spokesman Mark Toner said moving ahead with the settlement project would be "another step towards cementing a one-state reality of perpetual occupation that is fundamentally inconsistent with Israel's future as a Jewish and democratic state".

Inside Story - How will new US-Israel military deal affect Middle East?

Toner also said that the proposal was "deeply troubling" because Israel announced it so soon after the military aid agreement.

In Jerusalem, the Israeli Foreign Ministry said the new housing would be built on state-owned land in an existing settlement, and would not change its boundaries or geographic footprint.

It said the construction is necessary to relocate residents from another area, who must leave their homes because of a court order.

"Israel remains committed to a solution of two states for two peoples, in which a demilitarised Palestinian state recognises the Jewish state of Israel," the ministry said in a statement.

The US, which has criticised Israel for such projects over decades, but has refrained from imposing consequences for the actions.