(Adds Ban quote, analyst comment, details, background)

By Arshad Mohammed

WASHINGTON, Dec 6 (Reuters) - The United States has asked Israel to explain its decision to build 300 new homes around Jerusalem, a move that Palestinians said could wreck peace talks launched last week, a U.S. official said on Thursday.

Israel this week issued a tender for the construction of some 300 units at Har Homa, one of several residential districts that have been built on land captured by Israel in the 1967 war and now home to a substantial Jewish community.

Palestinian leaders accused Israel of undermining the peace process launched last week by U.S. President George W. Bush, who announced that the Israelis and Palestinians would resume formal peace talks later this month after a seven-year gap.

After three days in which the U.S. State Department had avoided substantive comment on the matter, the U.S. official acknowledged that Washington found it troubling and had raised it with Israel.

"We don't want any steps taken that would undermine the confidence of the parties. This is an issue that we have been concerned about and we have sought clarification from the Israelis," said the official, who spoke on condition he not be identified because of the sensitivity of the matter.

U.N. Secretary-General Ban Ki-moon also voiced misgivings about the plan, made public less than a week after Bush announced plans on Nov. 27 for the fresh peace talks and presided over a handshake between Israeli Prime Minister Ehud Olmert and Palestinian President Mahmoud Abbas at Annapolis, Maryland.

"This new tender for 300 new homes in eastern Jerusalem, so soon after the Annapolis Middle East peace conference, I think is not helpful," Ban said, noting the United Nations had a consistent position on the illegality of such settlements.

Israel has denied that the decision to build the homes violated its commitment under the 2003 U.S.-backed "road map" peace plan to halt all settlement activity.

Israel has said it does not consider the site, known as Har Homa by Israelis and Abu Ghneim by Palestinians, as part of the West Bank territory the Palestinians want for a state.

But the chief peace negotiator for the Palestinians criticized the move as "an attempt to obstruct negotiations," which the two sides are to begin next Wednesday, and he called on the United States to stop the move.

Speaking before the U.S. decision to raise the issue with Israel was made public, Daniel Levy, an analyst at the New America Foundation, said the incident suggested that Washington needed to pay closer attention to such matters.

"It indicates the need for the kind of U.S. baby-sitting that's been absent (for) seven years and apparently is still not there," Levy said, saying better diplomacy would have prevented the dispute from erupting. (Editing by Peter Cooney)

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