LONDON: Britain on Saturday urged Israel to reverse its decision to build 3,000 settler homes in east Jerusalem and the West Bank, saying the plans would undermine peace efforts.

Foreign Secretary William Hague said he was "extremely concerned" by the move, which came in response to a historic UN vote to recognise Palestine as a non-member observer state.

"The UK strongly advises the Israeli government to reverse this decision," Hague said in a statement.

"The window for a two-state solution is closing, and we need urgent efforts by the parties and by the international community to achieve a return to negotiations, not actions which will make that harder."

He added: "If implemented, these plans (for new settlements) would alter the situation on the ground on a scale that makes the two-state solution, with Jerusalem as a shared capital, increasingly difficult to achieve."

Britain abstained from Thursday's UN General Assembly vote, saying that it wanted the Palestinians to unconditionally agree to negotiations on a lasting two-state deal with Israel.

But the British statement on Saturday said that Hague had also advised Israel to "avoid reacting in a way that undermined these goals" for a swift return to peace talks.