An EU spokesman said on Tuesday that settlement construction led to a collapse of peace talks the EU would hold Israel responsible.
The negotiations have so far yielded no tangible results.
On Monday, the 28 EU foreign ministers pledged "unprecedented" political, financial and security support for Israel and the Palestinians if they reach a peace agreement. In the event of a peace deal, the ministers said, the EU would offer Israel and a future state of Palestine a "special privileged partnership”, including increased access to European markets, facilitation of trade and investment, closer cultural and scientific ties and promotion of business-to-business relations. Greater political dialogue and cooperation in the security realm would also be envisaged, the ministers said.
At their meeting in Brussels, the government representatives proclaimed the EU's readiness to "contribute substantially" to bring about an end to the Israeli-Palestinian conflict, but did not specify any figures.