Israel had no reason to oppose Palestine's U.N. observer state membership, according to ex-prime minister Ehud Olmert, who plans to announce Wednesday whether he will run in the next polls.

"I have made my decision and I will announce it in two days," Olmert told Agence France Presse of his political future, after a speech in New York late Monday during which he renewed criticism of Prime Minister Benjamin Netanyahu's handling of the Israeli-Palestinian conflict.

Australia Tuesday joined Britain and France in summoning the Israeli ambassador to convey its "grave concern" over plans to build new settlements in east Jerusalem and the West Bank.

Foreign Minister Bob Carr said the Israeli proposal, and plans to withhold tax revenue from the Palestinian Authority, "enormously complicate the prospects for resuming negotiations between the two sides.”

Israel has revived a plan to construct 1,600 new settler homes in the east Jerusalem neighborhood of Ramat Shlomo that raised U.S. objections when it was first announced in 2010, an official said on Monday.

"In the next two weeks the interior ministry's district committee for Jerusalem will convene to discuss the objections to the program that was approved for deposit over two years ago," interior ministry spokeswoman Efrat Orbach told AFP.

Israel's decision to build new homes between east Jerusalem and Maaleh Adumim settlement is controversial plan which, if enacted, would cut the West Bank in half and threaten the viability of a future Palestinian state.

The decision, which was taken last week by Israeli Prime Minister Benjamin Netanyahu, relates to construction in a corridor of land in the West Bank which runs between the easternmost edge of annexed east Jerusalem and Maaleh Adumim -- which is known as East 1, or E1 for short.

Germany said Monday it was "deeply concerned" about Israeli plans for new settlements but would not "for the moment" summon its ambassador to Berlin.

Ahead of talks this week between Chancellor Angela Merkel and Israeli Prime Minister Benjamin Netanyahu, German government spokesman Steffen Seibert called on Israel to withdraw its plan to build new Jewish settler homes.

Three Israeli settlers were arrested on Monday on suspicion of having carried out a string of "price-tag" attacks against Palestinian property, Israeli police said.

"The police arrested three suspects in their 20s after they were involved in criminal incidents with nationalistic motives," said police spokesman Micky Rosenfeld.

Israel's ambassador to Britain was summoned to the Foreign Office on Monday to discuss plans for new settlements, officials said, warning of "strong reaction" to the proposals.

Foreign Office minister Alistair Burt called in Daniel Taub to warn that settlement building threatens the two state-solution and makes progress on peace talks with the Palestinians harder to achieve, the Foreign Office said.

U.N. leader Ban Ki-moon warned Sunday that if Israeli implemented its latest plan for new settlements it would deal an "almost fatal blow" to any prospects for peace with the Palestinians.

Israel's announcement about the 3,000 Jewish settler homes, whose planned location was not revealed, came in the wake of a historic vote by the United Nations General Assembly to upgrade Palestine's diplomatic status.

Israel must provide an "immediate and detailed explanation" for its targeting of journalists and media buildings during last month's Gaza conflict, the Committee to Protect Journalists said on Sunday.

In a letter to Israeli Prime Minister Benjamin Netanyahu, the watchdog said it was "gravely concerned that Israeli airstrikes targeted individual journalists and media facilities in the Gaza Strip between November 18 and 20."

Israel will not transfer tax and tariff funds it collects for the Palestinians this month in response to their successful bid for upgraded U.N. status, Finance Minister Yuval Steinitz said on Sunday.

"I have no intention of transferring the taxes due to the Palestinian Authority this month. They will be used to pay the Palestinian Authority's debts to the Israeli electricity company," Steinitz said.