JERUSALEM - Israel has given the go-ahead for plans to build over 1,000 new Jewish settler homes in annexed east Jerusalem, an official said Monday, sparking a Palestinian warning of an “explosion” of violence.

The announcement followed fresh outbreaks of violence in mainly Arab east Jerusalem, where Israeli police have clashed nightly with Palestinian protesters for several days.

“The government has decided to advance the planning of more than 1,000 units in Jerusalem - roughly 400 in Har Homa and about 600 in Ramat Shlomo,” the source in Prime Minister Benjamin Netanyahu’s office told AFP, referring to two existing settlements in volatile east Jerusalem.

The official did not elaborate and declined to comment on the likely political and diplomatic impact of such a move.

Palestinians and the international community are already incensed at settler moves in the east Jerusalem neighbourhood of Silwan, scene of much of the latest violence.

Jibril Rajoub, a senior member of Palestinian president Mahmud Abbas’s Fatah movement, warned of violent consequences likely to follow the settlement plans.

“Such unilateral acts will lead to an explosion,” he told a gathering of foreign journalists in the West Bank city of Ramallah. Abbas’s spokesman Nabil Abu Rudeina said it was a “dangerous escalation” with the potential to create an “earthquake” in the region.

On Sunday, Jerusalem police used tear gas against hundreds of Palestinians taking part in a “symbolic funeral” of 21-year-old Abdelrahman Shaludi, a Silwan resident who killed two people, including a baby, when he rammed his car into Jerusalem pedestrians last week.

Shaludi was shot dead by police as he tried to flee the scene of Wednesday’s attack. One Palestinian was arrested at the mock funeral and another two were detained for allegedly throwing stones in Issawiya, another neighbourhood of east Jerusalem, police said.

Police said they arrested eight more alleged rioters overnight. The funeral procession had tried to ascend to the Al-Aqsa mosque compound, the flashpoint holy site and epicentre of recent tensions.

Palestinian prime minister Rami Hamdallah later Monday travelled from Ramallah to Jerusalem to visit the compound, police and Palestinian officials said.

Clashes continued around east Jerusalem until Shaludi was finally buried late Sunday night under draconian Israeli security restrictions, with the number of mourners restricted to 50.

The Palestinian Red Crescent said more than 20 Palestinians were injured during the night but did not give a breakdown.

With the latest Israeli green light for expansion, Lior Amichai of settlement watchdog Peace Now told AFP: “There is never a good time to do such things, now more than ever as Jerusalem is burning,”

Previous plans to build at Ramat Shlomo, an ultra-Orthodox Jewish settlement near the Palestinian refugee camp of Shuafat, were announced during a March 2010 visit by US Vice President Joe Biden, sparking outrage in Washington, which had been trying to revive peace talks at the time.

Moves toward a further round of fresh construction there were reported last October, ahead of a visit by US Secretary of State John Kerry aimed at reviving the peace process forward.

Amichai said it was unclear from Monday’s statement whether the government was close to issuing construction tenders or wanted to fast-track plans still in their early stages.

Ties between Israel and its close ally Washington have become increasingly frayed over Israeli officials’ public criticism of US foreign policy and the Obama administration’s alarm at Netanyahu’s relentless settlement-building.

The Israeli official also said that plans would be “advanced for infrastructure projects in the West Bank that will include roads for the Palestinians.”

Even before the latest violence, Jerusalem had been swept by almost daily clashes for four months.

The summer clashes were ignited by the murder of a Palestinian teenager in July and the bloody 50-day Gaza war that killed nearly 2,200 Palestinians and 73 people on the Israeli side.