Israeli officials said the State Department had summoned Michael Oren, Israel's ambassador to Washington, and told him plans for the construction approved this month by Israel's Jerusalem municipality should be suspended.
"We cannot accept the idea that Jews will not have the right to live and buy (homes) anywhere in Jerusalem," Netanyahu said, calling the city Israel's united capital, a claim that is not recognized internationally.
"I can only imagine what would happen if someone would suggest Jews could not live in certain neighborhoods of New York, London, Paris or Rome. There would certainly be a great international outcry," he told reporters at the weekly cabinet meeting. "We cannot accept this edict in Jerusalem."
The White House declined to comment.
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