CAIRO/JERUSALEM (Reuters/AFP) - The Arab League and Islamist movement Hamas said on Sunday Arabs should not normalise ties with Israel as long as the Jewish state sticks to plans to build more settlements on occupied Palestinian land. It is impossible to speak of normalisation when Israel rejects any significant measure, Arab League chief Amr Mussa said at a joint news conference in Cairo with Hamas supremo Khaled Meshaal. Israel persists in its intransigent position and rejects every significant measure concerning a freeze in settlement constructions, he said. His remarks came after Israeli Transport Minister Yisrael Katz said that the Jewish state stood firm on a plan to authorise hundreds of new settler homes in the occupied West Bank before a possible construction freeze, shrugging off a rebuke from Washington. The (Israeli) prime minister will decide in the coming days on the building of hundreds of additional housing units in order to solve existing problems in various settlements, Transport Minister Yisrael Katz told Israel Radio. The number of new housing units to be approved could range between 400 and 700, Israeli media reported. I dont believe that any Arab government can offer Israel the gift (of normalisation) on a silver platter. This issue (normalisation) must be closed, Mussa said. I believe that there will be a very violent reaction across the Arab world should we learn that someone normalised (ties with Israel), he added. Meshaal agreed with Mussa and warned Arab countries against giving the Israelis the reward of normalisation. He also warned against US policy in the Middle East which he said aims bringing into alignment Arab countries against Iran, rather than against Israel. Nevertheless Meshaal said that Hamas will monitor closely what (US President Barack) Obama will propose on the sidelines of the UNGA later this month concerning the peace process. The US is hoping that Israel and the Palestinians can make progress on reviving Middle East peace efforts at the General Assembly in late September. Were certainly hopeful that we can continue to make progress. And if that happens in New York, we would be quite happy, White House spokesman Robert Gibbs said at the end of August. Hamas supremo Khaled Meshaal confirmed on Sunday that Germany is mediating an Israeli-Palestinian prisoner swap that would include Israeli soldier Gilad Shalit but stressed the bid is in its early stages. Concerning Shalit, as you know there is some development as a result of the Germany mediation bid in coordination with Egypt, Meshaal told a joint news conference in Cairo with Arab League chief Amr Mussa. But we are in the early stages. We have not discussed any (Palestinian) names nor any details, said the exiled leader of the Hamas movement which controls the Gaza Strip, during a visit to Egypt. More time is needed before any real progress can be announced, Meshaal said. We must be cautious and not hasty.