Brazil and Germany joined international condemnation Wednesday of Israel's plan to build 1,600 new settlement homes in east Jerusalem, saying the "wrong move" was damaging to the peace process.

Visiting German Foreign Minister Guido Westerwelle said the settlement activity announced Tuesday by Israel's interior ministry, during a high-profile visit by US Vice President Joe Biden, was "the wrong move at the wrong time."

"That's why we're very concerned. What has happened is cause for great concern," he told reporters.

His host and counterpart Celso Amorim said Brazil "deeply regrets" that Israel's announcement "has come at the time there was a push to resume (peace) negotiations between Israelis and Palestinians."

Brazil is a non-permanent member of the UN Security Council.

Israel's interior ministry on Tuesday said it had approved the construction of 1,600 new housing units in Ramat Shlomo, a Jewish settlement in the mainly Arab eastern sector of Jerusalem.

The controversial move has infuriated Palestinians, who consider settlements to be a major hurdle in long-hobbled attempts to reach a peace accord, and who want occupied east Jerusalem as the capital of their promised state.

It came two days after the Palestinians grudgingly agreed to indirect talks after months of US shuttle diplomacy, and coincided with a visit to Jerusalem by Biden, who condemned the move as "precisely the kind of step that undermines the trust we need right now."

Brazilian President Luiz Inacio Lula da Silva will be the first Brazilian president to visit Israel on March 16-17 and will also visit the Palestinian territories and Jordan.

In his bid to make Brazil a bigger player in the Middle East peace process, Lula will meet with Israeli President Shimon Peres and Prime Minister Benjamin Netanyahu.

In November Lula hosted meetings in Brazil with Peres, Palestinian leader Mahmud Abbas and Iranian President Mahmoud Ahmadinejad.

Brazil is the fourth and final country on Westerwelle's Latin American tour which began Sunday with an aid delivery in quake-stricken Chile and also included stops in Argentina and Uruguay.