A project of building 20 Jewish apartments in East Jerusalem has been approved, Israeli media reported on Tuesday.

The apartments will be located at the Shepherd Hotel compound in the Sheikh Jarrah neighborhood, a hotel purchased by American Jewish tycoon Irving Moskowitz in 1985, local daily Haaretz reported.

The local planning council issued its final approval for the project last Thursday, said the report.

However, an anonymous official of Jerusalem municipality told the Ynet, another local news service, that the project was approved in July instead of recently.

The news came out when Israeli Prime Minister Benjamin Netanyahu held a close-door meeting with the United States President Barack Obama in Washington on Tuesday, apparently in an effort to relief tensions with the U.S. administration that was angered by Israel's plan for building more houses in Jewish communities in East Jerusalem.

The row began weeks ago when an Israeli regional planning committee approved a proposal to construct 1,600 housing units in Jewish neighborhood Ramat Shlomo in East Jerusalem, an area claimed by Israel as part of its "indivisible capital" while deemed by the Palestinians as the capital of their future state.

That decision was taken while U.S. Vice President Joe Biden was in the city and Washington saw the move not only a personal insult to Biden but also another "unhelpful" step while the Obama administration was trying to reboot the stalled peace process.

Though apologizing for the timing of the announcement of the Ramat Shlomo building project, Netanyahu still vows to continue Israel's construction policy in Jerusalem.

"The Jewish people were building Jerusalem 3,000 year ago and the Jewish people are building Jerusalem today. Jerusalem is not a settlement. It's our capital," Netanyahu told the annual policy conference of the American Israel Public Affairs Committee (AIPAC), the most influential America's bi-partisan pro-Israel lobby group, on Monday.

Israel captured the Arab-dominated eastern section of the holy city in 1967, and later annexed it without international recognition. The international community does not recognize the legitimacy of the settlements in the West Bank and of the Jewish neighborhood in East Jerusalem.

About 180,000 Jews are currently living in East Jerusalem, in addition to the 300,000 Jewish residents in the West Bank. The Palestinians have stressed that the Israeli "occupation" has deprived them of the possibility to build a viable state on the two areas along with the Gaza Strip.