The "Quartet" guiding the Middle East peace process condemned Israeli building in eastern Jerusalem but called for a resumption of talks without preconditions.
The statement issued Friday morning by the grouping, which comprises the United States, Russia, the European Union and the United Nations, suggested frustration with both Israel and the Palestinians.
"Recalling that the annexation of East Jerusalem is not recognized by the international community, the Quartet underscores that the status of Jerusalem is a permanent status issue that must be resolved through negotiations between the parties and condemns the decision by the government of Israel to advance planning for new housing units in East Jerusalem," the statement said.
Israel's government angered the Obama administration last week when it announced a massive building start in eastern Jerusalem during what was to have been a friendly visit by U.S. Vice President Joe Biden.
The Palestinian Authority cited Israel's announcement to renege on its agreement to re-start "proximity" or indirect talks -- and the Quartet statement implied frustration with such tactics.
"The proximity talks are an important step toward the resumption, without pre-conditions, of direct bilateral negotiations that resolve all final status issues as previously agreed by the parties," the statement said. Israel has repeatedly said it is ready to start the talks without pre-conditions.
The Quartet praised the Palestinian Authority for its "significant progress" on establishing a security force but called on it to "fight violent extremism and end incitement." It also praised Israel for easing movement in the West Bank.
The statement recommitted to P.A. Prime Minister Salam Fayyad's plan to establish a state within two years. "The Quartet believes these negotiations should lead to a settlement, negotiated between the parties within 24 months, that ends the occupation which began in 1967 and results in the emergence of an independent, democratic, and viable Palestinian state living side by side in peace and security with Israel and its other neighbors," it said.