LONDON (AFP) - The British government is "dismayed" by Israel's plans to build a new settlement neighbourhood in annexed east Jerusalem, Foreign Secretary William Hague said on Sunday. "I am dismayed by the Israeli announcement on 14 October of a new settlement at Givat HaMatos," Hague said in an official statement. "This provocative step, which further encloses east Jerusalem, is particularly disappointing." He added: "Settlements are not only illegal under international law, but also undermine the possibility of a two-state solution to the Israeli-Palestinian conflict and those working for a sustainable peace. "I call again for these announcements to be revoked. Together with our EU and other partners we will make very clear to the Israeli government the strength of our concern." On Friday, UN leader Ban Ki-moon had accused Israel of provoking the international community by approving new settlements in Palestinian territories while efforts were being made to jumpstart peace talks. Israel considers Jerusalem to be its "eternal, indivisible" capital and does not view construction in the east to be settlement activity. The Palestinians, however, want east Jerusalem as the capital of their future state and are fiercely opposed to the extension of Israeli control over the sector.