Israeli Prime Minister Benjamin Netanyahu rejected on Sunday a US call to stop an East Jerusalem construction project, saying Israel's sovereignty over Jerusalem is "indisputable".

"Our sovereignty in Jerusalem is indisputable," said Netanyahu at the weekly cabinet meeting, "We can't agree to such a demand in East Jerusalem."

The US State Department summoned Israeli Ambassador in Washington Michael Oren over the weekend, and told him that the housing units building project in East Jerusalem should be halted, reported both Israel Radio and Army Radio.

The project was developed by American millionaire Irving Moskowitz, an influential supporter of Israeli settlement in East Jerusalem, the Israeli daily Ha'aretz reported.

Moskowitz bought a hotel in East Jerusalem in 1985 and planed to build housing units in the hotel's place, near Israeli government buildings, including several ministries and the national police headquarters.

The dispute on the construction project in East Jerusalem is the latest hint of the disagreement between Israel and the United States over the Israeli settlements issue.

Jewish neighborhoods in East Jerusalem, captured by Israel in 1967 and later annexed, are considered by international community as Israeli settlements and an obstacle to Israeli-Palestinian peace process.

The Obama administration called the Israeli government to freeze all its settlement activities, but Netanyahu government rejected the demand.

It is reported that nearly 300,000 Israelis live in the West Bank settlements, along with 180,000 Israelis in Jewish neighborhoods of East Jerusalem. The Palestinians demand the return of both areas, as parts of the future Palestinian state.

(Xinhua News Agency July 20, 2009)