RAMALLAH, West Bank: An open diplomatic row during the visit of Vice President Joe Biden has shined a spotlight on the US failure to rein in Israeli settlement ambitions and deepened Palestinian suspicions that the United States is too weak to broker a deal.

The vice president on Wednesday assured Palestinians the US is squarely behind their bid for statehood and urged the sides to refrain from actions "that inflame tensions or prejudice the outcome of talks."

"It's incumbent on both parties to build an atmosphere of support for negotiations, and not to complicate them," Biden said, standing alongside Palestinian President Mahmoud Abbas.

Israel's announcement was widely seen as a slap in the face to its all-important US ally. It stirred significant anger among US officials and widespread skepticism about whether the Obama administration would have the courage or the backing to take Israel to task as the US relaunches long-stalled peace negotiations. The future of those talks was called into question late Wednesday when Arab nations withdrew their support for them.

"This is a global message of American weakness and Israeli arrogance," said Palestinian lawmaker Hanan Ashrawi.

The vice president's visit had been largely aimed at repairing US-Israeli ties strained over the very same issue now overshadowing Biden's trip: Jewish settlements. Palestinians and the US consider settlements built on lands claimed by the Palestinians to be obstacles to peace.

Biden condemned the Israeli announcement and pointedly arrived 90 minutes late to a dinner with Israeli Prime Minister Benjamin Netanyahu.

Israel's oblique response to the row - that Netanyahu was blindsided by the announcement, that no one meant to offend Biden, that in the future the prime minister would make sure sensitive announcements are routed through him - did not appear likely to put the matter to rest.

The words of Interior Minister Eli Yishai, whose office ordered the new homes - "I am very sorry for the embarrassment ... Next time we need to take timing into account" - only reinforced the feeling that there would in fact be a "next time."

It appears President Barack Obama now has the choice of absorbing the blow or engaging in a politically unpalatable battle with the Israeli leadership, which past US presidents have largely avoided. Obama may be too invested in key domestic problems, the Iran nuclear issue and two wars to walk into that political minefield.

The Palestinians largely lost faith in the US as a broker after Obama tried - and failed - to get the hawkish Netanyahu government to stop building on lands Palestinians claim for a future state. Netanyahu eventually agreed to a construction slowdown rather than a freeze, but that did little to mollify Palestinians.

Abbas' aides have said privately that if Obama can't get Israel to play by the rules on settlements, he won't be able to push on far more sensitive issues, such as a partition of Jerusalem.

After nearly two decades of stop-and-go negotiations with few tangible results, strong US intervention is seen as key to solving the Israeli-Palestinian conflict.

Israel's latest building plans came just as the Palestinians had reluctantly agreed to resume indirect, US-brokered talks in the coming days - after a 14-month deadlock.

Capping a day of meetings with Palestinian leaders, Biden declared Wednesday that Washington is committed to brokering a final peace deal.

"The United States pledges to play an active as well as a sustainable role in these talks," Biden said. He stressed the Palestinians deserve an independent state that is "viable and contiguous," a clear message to Israel that the US expects a broad withdrawal from the West Bank as part of a settlement. Palestinians fear Jewish settlement enclaves would render a future state untenable by breaking it up into pieces.

Abbas, the Palestinians' leader, said Wednesday that new Israeli building, especially in Jerusalem, threatened the negotiations before they got off the ground.

"We call on Israel to cancel these decisions," Abbas said. "I call on the Israeli government not to lose a chance to make peace. I call on them to halt settlement building and to stop imposing facts on the ground" - a reference to the fear that settlement expansion will predetermine Israel's future borders.

The fate of Jewish settlements is one of the most contentious issues in the Israeli-Palestinian conflict. Nearly 300,000 settlers live in the West Bank, in addition to 180,000 Israelis living in Jewish neighborhoods built in east Jerusalem. The Palestinians want both areas - captured by Israel in the 1967 Mideast war - along with the Hamas-ruled Gaza Strip to become their future state.

Netanyahu's settlement slowdown pointedly excluded east Jerusalem, which Israel annexed after 1967 and considers part of its capital. Netanyahu has said he will never share control of the holy city.

The plan to build 1,600 new homes in the east Jerusalem neighborhood of Ramat Shlomo could increase that neighborhood's population of 20,000 by more than half.

Ministry spokeswoman Efrat Orbach said the ministry routinely issues announcements of planning decisions immediately after they are taken. This is not the first time that such announcements have dovetailed with visits by top U.S. officials. Plans for hundreds of settlement apartments were announced during the peace mission of former Secretary of State Condoleezza Rice.

Israel could end up paying for this slap by seeing amplified US pressure to make concessions.

Palestinian Prime Minister Salam Fayyad said the Palestinians appreciated "the strong statement of condemnation" by the US administration. But it was unclear if Biden's condemnation could restore U.S. credibility among Palestinians.

That condemnation appeared likely to exacerbate a widespread feeling in Israel that Obama is less friendly to the Jewish state than his predecessors. Still, Israeli leaders have traditionally been reluctant to openly spar with the United States, and Netanyahu could pay a domestic price.

Israel's opposition Kadima Party said it is planning a no-confidence vote in the prime minister in parliament for "destroying" the Biden visit.

The new construction plan also drew a sharp rebuke from Egypt, Israel's closest ally in the Arab world, and from U.N. Secretary-General Ban Ki-moon.

Late Wednesday, the 22-nation Arab League recommended withdrawing support for indirect talks between Palestinians and Israelis. Abbas had agreed to resume indirect negotiations with Israel due to the backing from Arab countries.

The league's Arab peace initiative committee called for a meeting of Arab foreign ministers, saying Israel's announcement showed it was not serious about negotiating. If the Israeli settlement moves are not halted immediately, the committee said, the talks would have "no meaning."

The European Union also urged Israel to reverse its decision "and to refrain from unilateral decisions and actions that may jeopardize" negotiations. British Foreign Secretary David Miliband called it a "bad decision at the wrong time." Germany said the plan was "not acceptable" given the two sides' recent agreement to renew talks.

From the windows of his limousine Wednesday, Biden was able to see many of the region's points of contention - including several enormous east Jerusalem settlements and the towering gray cement slabs of Israel's West Bank separation barrier.

In Bethlehem, the city of Jesus' birth, the vice president toured a Palestinian quarry and stopped at a local souvenir shop where he bought a small golden cross.

"How many such visits have we already had?" asked Rizek Qassis, a Palestinian butcher from the nearby town of Beit Jalla, as he watched the scene. "They come, shake hands, go home, and we remain behind, like always."