Israel's Housing Minister Uri Ariel on Tuesday said that 50 new homes would be built in annexed east Jerusalem to house Holocaust survivors.
"These 50 homes, which will be added to those existing homes for the elderly in east Talpiot, will be earmarked for Holocaust survivors," he told public radio in an announcement made the day after Israel marked Holocaust Memorial Day.
Ariel is number two in the hardline pro-settler Jewish Home party and he himself lives in a settlement.
The announcement was made shortly before US Secretary of State John Kerry met Israeli Prime Minister Benjamin Netanyahu for talks at the tail-end of a three-day visit.
Last month, Netanyahu reportedly ordered all bureaucratic approvals of new settler homes be suspended until after a visit by US President Barack Obama on 20 March in a bid to avoid embarrassing the political establishment.
Exactly three years ago, Netanyahu's government was deeply embarrassed after the interior ministry announced plans to build 1,600 settler homes in east Jerusalem during a visit by US Vice President Joe Biden.
The move triggered an unusually stern rebuke from Washington, which described the timing of the announcement as "insulting".
Israel captured the eastern half of the city during the 1967 Six Day War and later annexed it in a move never recognised internationally. It claims the entire city as its "eternal, undivided capital" and does not view construction in the east as settlement building.
The Palestinians want east Jerusalem as capital of their future state.