Israel plans to start extending its West Bank separation barrier (search) around its largest settlement bloc by the end of May — construction that would in effect expand Jerusalem's boundaries and cut off Palestinians from the city they seek as a future capital, government and security officials said.

The new segment would put the Maaleh Adumim settlement, with more than 30,000 residents, on the "Israeli" side of the barrier. Israel's Cabinet approved the Maaleh Adumim loop in February but didn't announce a date for the start of construction.

Israel wants to begin building the Maaleh Adumim portion before withdrawing from the Gaza Strip (search) this summer, the officials said on condition of anonymity.

The United States and the European Union are expected to ratchet up pressure on Israel to renew peace talks with the Palestinians after the pullout, and completing the barrier around Jerusalem would establish facts on the ground regarding a key issue in peace talks — the fate of the city.

Israeli officials declined to comment publicly on the construction start, also reported in the Maariv daily. A senior government official, speaking on condition of anonymity, told The Associated Press that "they've reached the point where they are constructing now in that particular area."

"They are continuing to build around Jerusalem in those places where there is no litigation or pending Supreme Court injunction," he said Monday, referring to legal challenges to the barrier's route.

Israel is already building sections of the barrier elsewhere on the outskirts of Jerusalem. Once the barrier rings the entire city, it would cut off eastern Jerusalem, which the Palestinians claim as their future capital, from its West Bank hinterland.

Shortly after the Maaleh Adumim section is completed, construction will begin on another section, connecting the Gush Etzion (search) bloc of settlements to Jerusalem from the south, the officials said.

A separate road will be built to allow Palestinians free access between West Bank cities, and a small entrance to Jerusalem will be left open for Israeli motorists traveling from the West Bank's Jordan Valley, the officials said.

Israel says it is building the 425-mile barrier to wall out suicide bombers and other attackers who slip into Israel from the West Bank. Palestinians say the barrier is a thinly veiled land grab because it dips into the West Bank in some areas, and the World Court at The Hague, in a non-binding ruling, has deemed it to violate international law because it encroaches on the West Bank.

Asked to comment on the construction of the Maaleh Adumim portion of the barrier, U.S. Embassy spokesman Paul Patin said: "Our position on the fence hasn't changed. We accept Israel's right to do what is necessary to defend its citizens. But to the extent to it encroaches on disputed territory, it concerns us."

Israel is also moving ahead with plans to build 3,650 housing units between Maaleh Adumim and Jerusalem. That plan has so irked the U.S. that President Bush criticized it during an April news conference with Israeli Prime Minister Ariel Sharon (search) at the president's Texas ranch.

Senior Palestinian officials were not immediately available for comment.

The Israeli government might not be the only one racing against the pullout clock. Military police say the theft of missiles and other arms from military arsenals has increased in recent months, raising fears that Jewish extremists who oppose a Gaza pullout will attack Jerusalem's most sensitive holy site.

The shrine, known to Muslims as Haram as-Sharif and to Jews as the Temple Mount, is home to two mosques built on the site of the biblical Jewish temples. Security officials say it is a possible target because it can be easily hit. Any attack on the shrine would inflame passions worldwide.