Solana expressed "concern following the Israeli decision to grant a building permit for (expansion plans) at Maale Adumin," a key settlement just east of Jerusalem.

"This decision runs counter to the commitment by parties involved to abstain from any unilateral action which could affect a final solution" to the Israeli-Palestinian conflict, he added.

It emerged at the weekend that Israeli Defence Minister Shaul Mofaz had approved the building of more than 3,500 new homes in Maale Adumim, the largest Jewish settlement in the West Bank.

"The European Union expects the Israeli government to abide by its obligations as set out in the road map, in particular relating to the freezing of settlements," Solana added.

Despite calls by the US State Department to stop the settlement construction, Sharon has ruled out a freeze, and is also pressing ahead with building work at two other settlements, Gush Etzion and Ariel.

Meanwhile, a top US diplomat denied Washington has reached an accord with Israel over the final status of large Jewish settlement blocs in the West Bank, as Israeli troops yesterday maintained a lockdown on the Palestinian territories for the Jewish festival of Purim.

Dan Kurtzer, the US ambassador to Israel, turned down Israeli claims of "understandings" with Washington over a comprehensive future agreement with the Palestinians.

Kurtzer's comments, in a meeting with a group of Israeli trainee diplomats, were published in the top-selling Yediot Aharonot daily.