Rice, while making what has become nearly a monthly trip to assess the negotiations, said Israeli housing expansions are a recurring problem. In particular, she says she will discuss the latest announcement of 1,300 new homes in east Jerusalem with every Israeli official she sees.
With peace talks under way, Rice said, now is a time to build confidence on both sides. "This is simply not helpful to building confidence," she told reporters before arriving in the Israeli capital.
An aide to moderate Palestinian President Mahmoud Abbas said Saturday that Abbas will insist that Rice pressure Israel to stop the construction. At the same time, an Israeli government spokesman said that Israel was looking forward to "constructive talks" with Rice.
Israel has committed to halt all settlement activity. But the country insists it has the right to build housing for Jews in east Jerusalem because it annexed that sector of the city shortly after capturing it in the 1967 Mideast war.
Israel's announcement on Friday brought to more than 3,000 the number of homes Israel has approved for construction on land that Palestinians claim since the renewal of the U.S.-supported peace talks late last year.
"We firmly condemn this project, which reveals the Israeli government's intention to destroy peace," Palestinian negotiator Saeb Erekat said.
The fate of Jerusalem, site of shrines sacred to Judaism, Islam and Christianity, lies at the heart of the Israeli-Palestinian conflict. Palestinians hope to make east Jerusalem the capital of their future state and say continued Israeli construction there makes it difficult to persuade ordinary Palestinians to support peace talks and not violence.
The future of the city recently became an issue in the U.S.
presidential election, when Democrat Barack Obama alarmed Palestinians and Arab-Americans by saying Jerusalem should be Israel's capital and remain undivided. He did not initially mention the Arab claim.
Rice and other U.S. officials have publicly scolded Israel over housing before, but her frustration was evident Saturday. Over the year and a half that Rice has been making regular peace missions, there has been a pattern of provocative Israeli housing announcements just before or just after her visit.
"Unfortunately there have been a few whether I'm coming or not," Rice told reporters. Her clipped tone and arched brows revealed annoyance. "Look, it's a problem, and it's a problem that we're going to address with the Israelis," she said.
Although Israeli authorities say the announcements are not related, Palestinians say the timing is clearly meant to placate hard-liners in Israel who oppose the land concessions that would be inevitable if the U.S.-sponsored peace process ever bore fruit.
President Bush predicted Saturday that an Israeli-Palestinian agreement is possible by year's end.
A total of 270,000 Jews live in the West Bank, and an additional 180,000 live in east Jerusalem.
Privately, the Palestinians acknowledge that Israel will hold on to much of the disputed land where Jews live, and are prepared to trade it for equal amounts of Israeli territory. But they say the reports of continued construction weaken support in the Palestinian street for Abbas' administration.
Abbas briefly called off peace talks over the construction earlier this year.
Rice also said Israel has not fully honored its pledge to make practical improvements in the daily lives of Palestinians in the occupied West Bank, where as a security precaution the Israeli military restricts Palestinian movement and controls details of ordinary life.
There are a few small success stories, such as demonstration projects in which Palestinian security forces are operating with some autonomy, Rice said.
"But it's not enough, and there certainly and clearly needs to be more," she said. "I understand the security considerations as well as anyone but the obligation was undertaken to improve the lives of the Palestinians, and we're going to have to work very hard if we're going to make that true in a broader sense."