The EU has hit out at Israel after a Jerusalem official said that tenders for new settlements would be announced following the release of Palestinian prisoners on Sunday.

An EU diplomat told Israel’s Channel 10 news that Jerusalem should expect a “harsh response by the European governments if it intends to go in this direction”.

Prime Minister Benjamin Netanyahu’s government has said it will authorise the construction of between 1,000 and 2,000 homes beyond the Green Line after freeing the next batch of 26 Palestinian prisoners. The prisoner release is part of a pre-agreed, ongoing trust-building measure designed to keep the peace process alive.

Chief negotiator Saeb Erekat condemned the decision as “blast [to the] peace process”.

Meanwhile, a report emerged this week that secret, back-channel talks between high-level representatives of Mr Netanyahu and PA president Mahmoud Abbas have been taking place in London for years.

It is thought that the talks involved lawyer Yitzhak Molcho on the Israeli side, and London-based businessman Bassel Aqel for the Palestinians.

Nabil Abu Rudaineh, a spokesperson for President Abbas, denied the existence of the back channel.