PALESTINIANS' joy at the vote in the UN General Assembly last weekend, which led to Palestine's status at the world body rising to that of a non-member observer state, has not been diminished by Israel's retaliation. In the wake of the UN vote, the government of Benjamin Netanyahu authorised the construction of 3000 more housing units on occupied Palestinian land.

Palestinians say that the development will cut the West Bank in two, and restrict Palestinian access to Jerusalem. In effect, this would torpedo the prospect of a contiguous Palestinian state. Israel also said that it was withholding the equivalent of £75 million of custom duties owed to Palestinians.

The White House urged Israeli leaders to "reconsider these unilateral decisions", and the UK, France, Spain, Sweden, and Denmark summoned Israeli ambassadors to lodge protests.

The Palestinian President, Mahmoud Abbas, was given a rapturous welcome when he returned to Ramallah from New York, and there has been wide praise for him in the Middle East and beyond.

Britain's decision to abstain in the UN vote was widely condemned. In a joint letter to the Foreign Secretary, William Hague, the Bishop of Exeter, the Rt Revd Michael Langrish, and the RC Bishop of Clifton, the Rt Revd Declan Lang, who chairs the Department for International Affairs for the Bishops' Conference of England and Wales, spoke of "the UK Government's regrettable decision" to abstain in the UN vote.

In a debate on Palestine in the House of Lords on Monday, the Bishop of Guildford, the Rt Revd Christopher Hill, described the latest Israeli settlement expansion plans as "an absolute roadblock to the resumption of any progress and any new negotiations".

Replying for the Government, Baroness Warsi agreed that the settlement initiative would "create doubts about its [Israel's] stated commitment to achieving peace with the Palestinians".