Jewish settlement construction in Israeli-annexed east Jerusalem has spiked since President Donald Trump took office in 2017, according to official data obtained by the Associated Press.

The data also showed strong evidence of decades of systematic discrimination, illustrated by a huge gap in the number of construction permits granted to Jewish and Palestinian residents.

The expansion of the settlements in east Jerusalem, which Israel seized along with the West Bank and Gaza in the 1967 Mideast war, threatens to further complicate one of the thorniest issues in the conflict.

The refusal to grant permits to Palestinian residents has confined them to crowded, poorly served neighbourhoods, with around half the population believed to be at risk of having their homes demolished.

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The data was acquired and analysed by the Israeli settlement watchdog Peace Now, which says it only obtained the figures after a two-year battle with the municipality. It says the numbers show that though Palestinians make up more than 60 per cent of the population in east Jerusalem, they have received only 30 per cent of the building permits issued since 1991.

The fate of the city, which is home to holy sites sacred to Jews, Muslims and Christians, is at the heart of the decades-old conflict. The Palestinians want east Jerusalem to be the capital of their future state, while Israel views the entire city as its unified capital. Tensions have soared since Trump, a close ally of Israel Prime Minister Benjamin Netanyahu, recognised Jerusalem as Israel's capital in 2017 and moved the US Embassy there.

That move broke with a longstanding international consensus that the city's fate should be decided in negotiations.

Trump has argued that his recognition does not preclude a final settlement.

But the Palestinians and rights groups say his unbridled support for Israel's nationalist Government has given it a free pass to tighten its grip on war-won lands sought by the Palestinians.

Peace Now found that in the first two years of Trump's presidency, authorities approved 1861 housing units in east Jerusalem settlements, a 60 per cent increase from the 1162 approved in the previous two years. The figures show that 1081 permits for settler housing were issued in 2017 alone, the highest annual number since 2000.

A total of 1233 housing units were approved for Palestinians in 2017 and 2018, according to Peace Now.

The data did not include the number of Jewish and Palestinian applications, or the rates of approval, though many Palestinians acknowledge not applying because they say it is nearly impossible to get a permit.

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The figures are for construction permits issued by the municipality, the final step of a costly bureaucratic process that can take years to complete. The figures show that since 1991, the municipality has issued 21,834 permits for housing units in Jewish settlements in east Jerusalem and just 9536 for Palestinian neighbourhoods.

Hagit Ofran, an expert on settlements who collected and analysed the data, says the discrepancy in permits dates to 1967, when Israel expanded the city's municipal boundaries to take in large areas of open land that were then earmarked for Jewish settlements.

At the same time, city planners set the boundaries of Palestinian neighbourhoods, preventing them from expanding.

"In the planning vision of Jerusalem, there was no planning for the expansion of Palestinian neighbourhoods," she said.

- AP