"We condemn the Israeli authorities decision to build 2,610 homes in Givat Hamatos," French Foreign Minister Laurent Fabius said in a statement, adding that it would be the first new colony in East Jerusalem in 15 years.
"We urgently call on the Israeli authorities to reverse this decision," he said.
Fabius said the settlements threatened a "two-state solution" - meaning an independent and democratic Palestinian state living alongside Israel.
"One cannot claim to support a solution and at the same time do things against without consequences being drawn, including at the European Union level," Fabius said without elaborating.
The U.S. State Department said on Wednesday that reports that Israel had moved forward with settlement plans would call into question Israel's commitment to peace.
(Reporting by Leigh Thomas; Editing by Robin Pomeroy)
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