Israel has rejected out of hand a United States demand to stop a building project in annexed east Jerusalem, in the allies' latest dispute over settlements.
Prime Minister Benjamin Netanyahu said last night that the Government was not going to place restrictions on Jewish residents in a city that the state considers its capital.
Israel's ambassador in Washington Michael Oren was summoned to the State Department at the end of last week and was told the project should be halted.
US demands anger Israel
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