"In line with the EU's long-standing position, we expect the Israeli authorities to immediately halt the ongoing demolitions," said a spokesman for the EU's foreign policy arm, which represents the bloc's 28 member states.

"The continuation of this policy undermines the viability of the two-state solution and the prospect for a lasting peace and seriously jeopardises the possibility of Jerusalem serving as the future capital of both States."

Israel earlier Monday bulldozed a number of Palestinian homes it considers illegal south of Jerusalem.

The Palestinians immediately slammed the demolitions in the Sur Baher area which straddles the West Bank and Jerusalem, but Israel has defended the move as essential to its security.

The EU backed the Palestinian view that in the land in question, according to the Oslo peace accords, "all civil issues are under the jurisdiction of the Palestinian Authority."

But Israel says the buildings were built too close to the separation barrier that it built in the early 2000s to stop attacks from the West Bank.

Palestinians accuse Israel of using security as a pretext to force them out of the area as part of long-term efforts to expand settlements and roads linking them.

Israel occupied the West Bank and east Jerusalem in the 1967 Six-Day War. It later annexed east Jerusalem in a move never recognised by the international community.