Ashton shows pro-Palestinian side at EU parliament

"This plan should be reversed. Settlement activity threatens the viability of an agreed two-state solution and runs contrary to the Israeli stated commitment to resume negotiations," she said.

She later added on a personal note: "I have condemned settlement activity every time it was announced - I have made six statements this year, plus one Quartet [a joint EU, Russia, UN and US body] statement plus the comment today ... Each time I have met him [Israeli leader Benjamin Netanyahu] I have told him settlements are illegal under international law."

She also praised Palestinian leaders Mahmoud Abbas and Salam Fayyad: "They are people who hold the values we hold dear in their hearts. They believe in the values we hold ... I believe Israel could do no better than negotiate with them."

Pro-Israeli countries such as the Netherlands have said Ashton is not a neutral broker in talks on whether the EU should back Palestine's bid to join the UN. Her own officials say she was deeply affected by Palestinian hardships on recent visits to Gaza and the West Bank.

MEPs will on Thursday vote on a draft resolution which says the EU assembly: "Supports and calls on member states to be united in addressing the legitimate demand of the Palestinian people to be represented as a state at the United Nations."

The text already has the backing of the socialist, liberal, green and far-left groups. The language is designed to accommodate various opinions - socialists say Palestine should get full UN membership, while liberals say they should become a "non-member state."

The biggest group, the centre-right EPP, is still making up its mind. But senior EPP figures, such as German deputy Hans-Gert Poettering and Dutch member Ria Oomen-Ruijten, spoke up for Palestine in the plenary debate.

Meanwhile, EU countries have voiced clear divisions at the UN in New York over the past week. Ten (Belgium, Finland, France, Greece, Ireland, Luxembourg, Malta, Portugal, Spain and Sweden) are on the pro-upgrade side. Five (Bulgaria, the Czech Republic, Italy, Romania and the UK) have indicated they would vote No. The rest are keeping quiet.

"Provocative of Israel to announce new settlements in East Jerusalem now. Clearly contrary to Middle East peace Quartet demand," Swedish foreign minister Carl Bldt tweeted on Tuesday.

For his part, Netanyahu in an interview with the Jerusalem Post the same day showed little interest in what the EU thinks. "We plan in Jerusalem. We build in Jerusalem. Period. The same way Israeli governments have been doing for years - since the end of the 1967 war," he said.