The Palestine Liberation Organisation is to appeal to the UN Security Council over Israel's settlement construction, after tenders were invited for another 1,500 settler homes, a senior official said on Thursday.

"The executive committee of the PLO views this latest escalation with the utmost seriousness," Hanan Ashrawi said in an English-language statement.

The committee "will counter it by addressing both the United Nations Security Council and the General Assembly as the proper way of curbing this grave violation and ensuring accountability," she added.

Israel's Housing Ministry announced plans for the new homes, 400 of them in annexed east Jerusalem, in what it said was a "fitting Zionist response" to the formation of a Palestinian unity government backed by the Islamist Hamas movement.

The Palestinians threatened an "unprecedented" response to the move, with one senior official saying the leadership was considering an appeal to the international justice system.

"The Palestinian leadership is looking seriously into going to international courts against settlement activity," the official said, speaking on condition of anonymity.

The Palestinian presidency has also vowed an unprecedented response to Israel.

Nabil Rdeneh, spokesman for Mahmoud Abbas, the Palestinian president, said Israel must realize that its settlement activities had been rejected, warning of an unprecedented response to such policies.

He added that the move came after the international community recognized the recently announced national unity government, which is opposed by Israel.

There could be no peace while Israel was continuing its settlement activities, he stressed.

At the opening ceremony for the sixth ministerial conference of the China-Arab States Cooperation Forum in Beijing on Thursday, Chinese President Xi Jinping said China firmly supported the Middle East peace process.

China supported the establishment of an independent state of Palestine with full sovereignty that was based on the 1967 borders and with East Jerusalem as its capital.

China hoped the parties concerned would adopt concrete measures to remove obstacles for peace talks and break the deadlock as soon as possible.

Xi also voiced China's support for the establishment of a Middle East nuclear-weapons-free zone. China opposed any attempt to change the political landscape in the Middle East, he added.

The option of taking legal action at the International Criminal Court in The Hague against Israeli settlement building opened up after the Palestinians won observer-state status at the UN in 2012.

But they agreed to hold off for the duration of US-brokered peace negotiations with Israel, which collapsed earlier this year.

Chief negotiator Saeb Erakat said, "It is time to hold Israel accountable in front of international organizations in light of international law.

"Those who fear the international courts should stop their war crimes against the Palestinian people, first and foremost of which is settlement activity."