JERUSALEM (Reuters) - A plan to build 1,400 new homes for Jews on Israeli-annexed land in the West Bank could be approved as early as next week by Israels Jerusalem municipality, a city council member said on Sunday. Meir Margalit told Reuters the Jerusalem city planning commission was set to consider on January 24 the building plans for Gilo, an urban settlement built on land Israel captured in a 1967 war and annexed to Jerusalem. It is another nail in the peace processs coffin, Margalit, a member of the left-wing opposition party Meretz, said about the project, which seemed certain to draw Palestinian and international condemnation. US Secretary of State Hillary Clinton last week denounced the demolition of a derelict hotel in mostly Arab East Jerusalem to make way for 20 homes for Jews in a settlement project. Prime Minister Benjamin Netanyahu responded publicly by saying Jews had a right to live anywhere in Jerusalem. Palestinians want East Jerusalem, which Israel captured along with the West Bank in 1967, as the capital of the state they intend to establish. Israel considers all of Jerusalem its capital, a claim that is not recognised internationally. Nabil Abu Rdainah, spokesman for the Palestinian president, said announcements of more settlement building would represent more obstructions in the way of American efforts for a return to the peace process. A resolution condemning Israeli settlement construction would be submitted to the UN Security Council within 10 days for a vote, he added. The Palestinians United Nations envoy said last week the United States had yet to be persuaded to support such a resolution. A statement by the Jerusalem municipality said it was obligated by law to discuss the plan for 1,400 housing units, which was submitted by private entrepreneurs. The proposal would still need to be approved by Israels Interior Ministry if it is adopted at a municipal level. I see no reason not to authorise the plan, Elisha Peleg, a member of the Jerusalem city planning commission, told Reuters. Foreign governments intervening in the internal affairs of Jerusalems municipality is illegitimate and we reject it. About 500,000 Israelis live in the West Bank and East Jerusalem among 2.7 million Palestinians. Some 40,000 Israelis live in Gilo. The World Court has said settlements Israel has built in occupied territory are illegal. Palestinians say the enclaves could deny them a viable state.