The United Nations and all UN Security Council powers except the United States on Wednesday condemned Israel's heightened settler construction in the Palestinian territories as a threat to flagging peace efforts.

UN leader Ban Ki-moon said Israel was on a "dangerous path," while European Union nations said Israel was "undermining faith" in its willingness to negotiate with Palestinian leaders.

Russia's UN envoy called the Israeli construction "fraught" with risks and a threat to decades of efforts for a two-state end to the Israeli-Palestinian conflict. China also called on Israel to pull back from confrontation.

The United States, Israel's main ally, was starkly absent from repeated statements of condemnation made after a UN Security Council meeting dominated by the growing settlement showdown.

Israel has approved thousands of new homes in the West Bank and occupied East Jerusalem since the UN General Assembly voted on November 29 to recognize Palestine as a non-member state.

Israel approved plans to build 2,610 homes in east Jerusalem and tenders for 1,048 units in the West Bank just before the UN meeting.

UN secretary general Ban said the Israel-Palestinian peace process was in "deep freeze," worsened by the settlement approvals.

"I call on Israel to refrain from continuing on this dangerous path, which will undermine the prospects for a resumption of dialogue and a peaceful future for Palestinians and Israelis alike," he said.

"Let us get the peace process back on track before it is too late," Ban declared.

The United Nations also called on Israel to end its freeze on transferring customs and tax payments that it collects for the cash-strapped Palestinian Authority.

UN ambassadors from Britain, France, Germany and Portugal highlighted European fears over the peace stalemate and stressed that their governments "strongly oppose" the Israeli construction.

"Israel's announcements to accelerate the construction of settlements send a negative message and are undermining faith in its willingness to negotiate," they said in a statement read by British ambassador Mark Lyall Grant.

"The viability of the two-state solution, that is key for Israel's long-term security, is threatened by the systematic expansion of settlements," Lyall Grant added.

And Russia's UN envoy Vitaly Churkin said "The situation could be defused should Israel reconsider the settlement constructions plans."

Churkin called for an urgent ministerial meeting of the diplomatic Quartet on the Middle East -- the United States, European Union, Russia and United Nations -- in a bid to revive direct Israel-Palestinian talks suspended since September 2010.

Non-aligned members of the Security Council -- Azerbaijan, Colombia, India, Guatemala, Morocco, Pakistan, South Africa and Togo -- read their own statement of condemnation. China also joined the protest, before all were rebuffed by Israel.

Israel's UN ambassador Ron Prosor said the new announcements were "planning and zoning" and that it could take years before the government allows the start of construction.

Prosor questioned how a contiguous state between Gaza and the West Bank could be created without cutting Israel in two. He said settlements are "not the major hurdle to peace" and the Palestinians should return to talks without conditions.