The U.S. State Department issued a strongly worded statement expressing “deep concern” over Israel’s recent approval of hundreds of new housing units in the disputed territories.

“If it’s true, this report would be the latest step in what seems to be the systematic process of land seizures settlement expansions and legalization of outposts that is fundamentally undermining the prospects for a two-state solution. We oppose steps like these which we believe are counterproductive,” State Department spokesman John Kirby said in a statement.

“This action risks entrenching a one state reality and raises serious questions about Israel’s intentions,” he said.

Kirby added that the U.S. is having “tough discussions” with Israeli leaders on the state of the Israeli-Palestinian peace process.

Last weekend, Prime Minister Benjamin Netanyahu and Defense Minister Avigdor Lieberman approved hundreds of new housing units in eastern Jerusalem and Ma’ale Adumim. While Israel considers both areas as part of the Jewish state in any future agreement with the Palestinians, they both lie beyond Israel’s pre-1967 borders—meaning that the U.S. and many other governments around the world oppose any Israeli construction there.