Israel announced plans Monday for more than 500 new housing units in the West Bank, following an apparent U.S. policy shift on Jewish settlements that has infuriated the Palestinians.

Also Monday, Israeli officials said there would be a one-year delay in construction of a large section of its West Bank barrier, citing a Supreme Court ruling that parts of the structure cause too much hardship on the Palestinians.

The barrier and settlement construction are linked to Prime Minister Ariel Sharon's "disengagement" plan to separate Israel from the Palestinians.

The plan includes a full withdrawal from the Gaza Strip (search) next year and completion of the separation barrier, while simultaneously beefing up large blocs of Israeli settlements in the West Bank. Sharon says the moves will boost Israel's security and preserve its Jewish majority.

The United States, which supports the Gaza pullout plan, has signaled recently that it will allow Israel to expand existing West Bank settlements, while remaining opposed to construction in undeveloped areas.

In the past, Washington has objected to all settlement construction.

The Palestinians have said the shift threatens prospects for peace and demanded a clarification from Washington. The Palestinians object to all settlements in the West Bank and Gaza, where they hope to establish an independent state.

Israel captured the areas in the 1967 Mideast war. Today, more than 230,000 settlers live in Jewish settlements, the vast majority of them in the West Bank.

Palestinian Prime Minister Ahmed Qureia (search) accused Israel of escalating tensions on Monday.

"While it is talking about evacuating settlements in Gaza, it is expanding all settlements in the West Bank," Qureia said. "This will not bring about stability nor will it bring peace."

Under the Israeli plan unveiled Monday, the country could build more than 500 housing units in existing settlements — in addition to 1,000 units announced last week.

The Israel Lands Authority (search) — responsible for some West Bank lands — plans to lease land to contractors who will build 300 units in the Jerusalem suburbs of Har Adar and Har Gilo next year, spokeswoman Ortal Tzabar said Monday.

She noted that the projects still need Defense Ministry approval, which is expected.

The Defense Ministry has approved construction of an additional 232 units in Adam and Emmanuel, settlements deeper inside the West Bank. But the Housing Ministry has decided not to go ahead with the projects for now, said Kobi Bleich, a ministry spokesman.

In a separate development, Defense Ministry official Danny Tirza (search), one of the planners of the separation barrier, told Israeli lawmakers that Israel will spend $6.6 million rerouting a 40-mile stretch of the structure from the Jewish settlement of Elkana to Jerusalem.

"The Israeli army is going to build along a new route in accordance with the finding of the Supreme Court," Tirza told the Foreign Affairs and Defense Committee, according to participants.

He said the route in the 12 places would be moved toward the "Green Line," the old frontier between Israel and the West Bank. The changes will prevent the confiscation of more than 4,000 acres of Palestinian land, he said.

He said the section wouldn't be completed until the end of 2005, a year behind schedule, according to meeting participants. Construction has not begun on most of this section of the barrier.

The delays follow a Supreme Court ruling in June that a 20-mile section of the barrier must be rerouted because it violated Palestinian human rights and international law.

The U.N. world court in the Netherlands subsequently issued a nonbinding advisory opinion in July declaring the barrier illegal and demanding Israel tear it down. Two weeks later, the U.N. General Assembly passed a nonbinding resolution adopting the world court decision.

The two court decisions have put pressure on Israel to move the barrier closer to its 1967 frontier.

Last week, Attorney General Meni Mazuz (search) warned that the U.N. court's ruling could lead to sanctions against Israel.

His warning coincided with a new order from the Israeli Supreme Court giving the government 30 days to report on how the world court's decisions would affect the barrier's construction.

Although just one-quarter of the 425-mile barrier has been built, it has already severely disrupted Palestinian lives, separating many people from their fields, schools, workplaces and neighboring towns and villages.

Israel says four years of violence forced it to build the barrier to prevent Palestinian militants from attacking its towns and cities. However, some sections of the structure dip deep into the West Bank.

Palestinians condemn the barrier as an attempt to grab chunks of West Bank land they want for their future state.

In other developments, Yasser Arafat held a long-anticipated meeting with Mohammed Dahlan (search), a Gaza strongman who has emerged as an outspoken critic of the Palestinian leader.

The meeting, which Arafat has repeatedly delayed, follows a wave of unrest in the Gaza Strip linked to growing dissatisfaction with the Palestinian Authority. Critics accuse Arafat of resisting efforts to clean up corruption in the government.

Neither man commented publicly after the lunch meeting.

In new violence, meanwhile, a 20-year-old Palestinian man was killed in the Rafah refugee camp in the Gaza Strip. Palestinians said the man was hit in the chest by random Israeli machine-gun fire.

The army said it had fired at abandoned buildings used by militants to fire at Israeli soldiers but could not confirm hitting anyone. It said an investigation was continuing.