A senior Israeli official has condemned the European Union’s new directive banning EU dealings with settlements as “worrying” and counterproductive to peace talks.

Benjamin Netanyahu gestures as he speaks to journalists during his visit to the east Jerusalem Jewish neighborhood of Gilo.

Benjamin Netanyahu gestures as he speaks to journalists during a visit to the East Jerusalem Jewish neighborhood of Gilo.

From 2014, Israeli authorities must guarantee that all EU funding and co-operation projects are conducted within Israel’s pre-1967 border and not in east Jerusalem, the West Bank or Golan Heights.

Israel’s deputy foreign minister, Zeev Elkin, called the decision a “very significant and worrying move”, telling Israel radio that it does not help attempts by US Secretary of State John Kerry to restart peace talks with the Palestinians.

Mr Kerry returns to the region this week for consultations, but is not scheduled to visit Israel or the Palestinian territories.

Israel says the status of lands it captured in the 1967 Middle East war should be resolved through talks.