"The EU has repeatedly stated that settlements are illegal under international law. It has also called on Israel to end all settlement activity, including natural growth, and to dismantle outposts erected since March 2001," a statement said.
"The EU deplores the recent settlement announcements. Any actions that could hamper or undermine the on-going negotiations must be avoided. Bold and decisive leadership is needed for these negotiations to succeed. The EU will continue to support this process," the statement added.
The Israeli government had agreed on Wednesday to build 1,500 new apartments in a particularly contentious Jewish settlement in East Jerusalem.
Israeli Prime Minister Benjamin Netanyahu did not make a statement about the new settlement plans.