Israel has advanced a project for 942 more settler homes in east Jerusalem closer to construction as part of a new fast-track plan to tighten its grip on the territory, The Associated Press reports.

Palestinians want to establish a capital in east Jerusalem and say any Israeli construction there undermines their claims.

The Interior Ministry says a government planning committee moved the project to the advanced stage of asking contractors to submit bids to build them.

Once a bid is awarded, construction can begin.

The homes are among some 5,000 new settler homes that Israel moved closer to construction in the past week.

Prime Minister Benjamin Netanyahu launched a settlement construction push to punish the Palestinians for winning recognition of a de facto state at the United Nations last month.