Israeli Prime Minister Benjamin Netanyahu announced plans on Thursday to build thousands of new homes for Jewish settlers in annexed east Jerusalem, a project unveiled less than two weeks before a general election.

"I have huge news today -- we're adding another 2,200 units to Har Homa," Netanyahu said in a video message posted by his office.

The contentious Har Homa community was first built in 1997, during a previous Netanyahu government. The prime minister said he had approved that initial construction "despite objections from the entire world" and estimated that Har Homa's population would grow from 40,000 to 50,000 when the new units were completed. 

Netanyahu also announced approval to build a new settlement with several thousands homes in Givat Hamatos, next to the mainly Palestinian east Jerusalem neighbourhood of Beit Safafa.

The new community will include 3,000 homes for Jewish residents and 1,000 "for the Arab residents of Beit Safafa", Netanyahu said. Watchdog Peace Now called the Givat Hamatos project "a severe blow to the two-state solution," as it would interrupt "territorial continuity between Bethlehem and east Jerusalem."

Israel seized east Jerusalem in the 1967 Six-Day War. It later annexed it in a move never recognised by the international community. Jewish settlements in east Jerusalem and the occupied West Bank are also considered illegal by most foreign governments and the United Nations.

Peace Now argued that Netanyahu, who is currently leading a caretaker government after two elections failed to produce clear winner, lacked the mandate to approve the contentious projects. "Such a change of policy can't happen in a transitional government without a mandate from the public," it said.

Netanyahu is trying to secure his re-election at a third vote due to take place on March 2. Polls indicate another close race between the prime minister's right-wing Likud and the centrist Blue and White party, with neither bloc expected to win an outright majority.