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A Boim spokesman said the new tenders were a part of steps the government was taking to "strengthen Jerusalem."

However, Olmert, in keeping with the previous government's policy, has vowed to keep West Bank settlement blocs, including enclaves near Jerusalem, under any future peace accord.

Israel regards all of Jerusalem as its capital. Palestinians want East Jerusalem to be the capital of the state they hope to establish in the West Bank and Gaza Strip.

Last month Boim instructed his office to publish a tender to build 286 new homes in the settlement of Beitar Illit, near Jerusalem.

Palestinian leaders say settlement expansion around Jerusalem could cut off Palestinians' access to the holy city and carve up the West Bank in a way that would deny them a contiguous state.

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