Israeli Prime Minister Benjamin Netanyahu has defended the planned construction of thousands of apartments in settlements in and near Jerusalem.
"What future awaits Israel if we cannot build in Gilo and Ramat Shlomo?" he asked in the interview with Channel 2 television.
Gilo and Ramat Shlomo - located within the Israeli-drawn municipal boundaries of Jerusalem but beyond the "green line" that separates Israel from the occupied West Bank - are two of the areas where the Netanyahu government plans to build.
The plans to build there, as well as in the E1 area east of Jerusalem, and Givat Hamatos, to the south, have sparked a storm of international criticism.
"So we, the state of the Jews, cannot build in our capital? I don't accept that," Netanyahu said.
The international community has not recognised Israel's claim that Jerusalem is its capital.
The Palestinians want East Jerusalem as the capital of their future state and complain that the Israeli construction is encroaching on the city's Arab neighbourhoods.
Netanyahu blamed Palestinian President Mahmoud Abbas for the absence of peace talks during the Israeli premier's past four years in office, because the Palestinian leader refused to negotiate unless Israel met certain preconditions, including a settlement freeze.
Israel's demand that the Palestinians recognise Israel as the Jewish state, by contrast, was not a precondition for the start of negotiations, but "a condition for the end of negotiations".
Netanyahyu did not deny that the expedited construction in and around Jerusalem was retaliation for the Palestinians' "unilateral" push to upgrade their status at the United Nations.
The General Assembly late last month voted overwhelmingly to accept Palestine as a non-member observer state.
By doing so and avoiding negotiations with Israel, the Palestinians "simply tore to pieces all the agreements with us," Netanyahu said, adding he had warned beforehand that Israel would not react by "sitting with its arms folded".