Riots broke out in Jerusalem and the West Bank yesterday as Palestinians
staged a œday of rage in protest at Israeli plans to build 1,600 new homes
in the disputed east of the city.

The announcement of the planned construction caused the worst diplomatic
crisis in decades between Israel and its most important ally, the United
States. Washingtons envoy, George Mitchell, yesterday abruptly postponed
his trip to the region in protest.

Dozens of masked youths pelted Israeli police with rocks and set tyres ablaze
at flashpoints across east Jerusalem and nearby checkpoints.

Thousands of police who had been deployed across the city fired stun grenades,
teargas and rubber bullets to try to disperse the crowds. Several dozen
Palestinians were arrested but gangs of youths continued to lob rocks at
Israeli forces throughout the day.

Palestinian leaders, who had been on the verge of resuming indirect peace
talks under American supervision, had warned of violence, especially after
Israel recently added West Bank holy sites that are sacred to both religions
to an Israeli heritage list. Mahmoud Abbas, the Palestinian President, said
that the move threatened to ignite a œreligious war, while Hamas, his
radical Islamist rivals, declared a œday of rage over the building plans.
In an effort to quell unrest, Israeli police have limited entrance to the
mosque compound in the Old City of Jerusalem, which Israelis refer to as the
Temple Mount, and set up checkpoints in the north of the country to turn
back Arab Israelis heading for the city, which is sacred to Jews, Muslims
and Christians.

Extra police were deployed in the Old City on Monday for the inauguration of a
refurbished synagogue that had been destroyed in the 1948 war that flared
when Israel announced independence. Although the area remained calm during
the ceremony, the Organisation of the Islamic Conference warned that the
reopening risked œdragging the region into a religious war.

The violence came after a visit last week by Joe Biden, the US Vice-President,
was overshadowed by the announcement that Israel planned to build hundreds
of housing units in a West Bank settlement and 1,600 in east Jerusalem,
which it seized in the 1967 war. The Palestinians see east Jerusalem as the
capital of their future state.

Washington called the declaration œinsulting and has demanded that Israel
should revoke the decision. Avigdor Lieberman, the far-right Israeli Foreign
Minister, called such demands œunreasonable and warned all parties against
becoming œhysterical.

Residents of Ramat Shlomo, the ultra-Orthodox neighbourhood where the
buildings are planned, seemed bemused by the controversy. œYou get the
impression theyre ready to build, said Simcha Vale, a 53-year-old
religious student originally from Toronto. œBut they might take five years.
Its not really reality, its a political thing.

Locals said that there was great need for new housing to accommodate the
burgeoning religious community, in which traditionally large families are
not well off because the men study religious texts rather than work full
time.

Michael Oren, the Israeli Ambassador to Washington, told Foreign Ministry
officials this week that the rift between Israel and the US had reached
œhistoric proportions. Hillary Clinton, the Secretary of State, acknowleged
the divide but insisted yesterday that Israel and the US were nevertheless
linked by an œunshakeable bond.

Avishay Braverman, a minister from Mr Netanyahus junior coalition partner
Labour, warned that the flaring diplomatic crisis could pressure his party
to abandon the year-old alliance.