By MARK LAVIE in Jerusalem

The Israeli government published plans to build new homes in its largest West Bank settlement yesterday, defying American opposition just as US Secretary of State Condoleezza Rice was in the region on a peace mission.

Winding up three days of talks, Rice said she would take part in a summit between Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas. The settlement issue, one of the thorniest, was likely to arise.

Rice repeatedly endorsed the 2003 "road map" peace plan, which requires Israel to halt all settlement building.

But Israeli officials said "natural growth", or growing settler families, was the reason for building in Maaleh Adumim, a settlement of 30,000 two miles east of Jerusalem. The Housing Ministry yesterday published adverts in Israeli newspapers asking developers to bid on the construction of 44 new homes.

Olmert spokeswoman Miri Eisin said the Israeli government was "committed to the continuing growth . . . of the settlements that are in the perimeter around Jerusalem". Israel has often declared that even under terms of a final peace accord, Maaleh Adumim would be in Israel. Palestinians demand removal of all West Bank Jewish settlements.

In a interview yesterday, Rice expressed general US displeasure with settlement expansion.

"We are very committed to the road map and to the obligations there, and I talk all the time to the Israelis about their activity that is prohibited by the road map," Rice told the Palestinian daily Al-Quds.

"The most important commitment that the President George W Bush has made is that the United States does not accept that unilateral steps can prejudge the outcome of final settlement," Rice said.

Settlement expansion was one of the reasons the road map foundered soon after it was presented.-AP