Israel continues occupying more Palestinian territory with US support
 Elad says the buildings were purchased several months ago |
Adi Mintz, a director of the Elad organisation, said Jewish settlers had moved into the buildings in Silwan district and on the Mount of Olives.
Reports say local Palestinians have responded angrily and are calling on the new residents to leave.
Elad's aim is to set up Jewish outposts in East Jerusalem, which has been occupied by Israel since 1967.
The non-profit organisation says it purchased the two buildings a few months ago.
Mr Mintz says Elad's goal is to create an irreversible situation in what he called the "sacred basin" around the Old City.
Sensitive issue
Israeli security guards armed with assault rifles and walkie-talkies have take up positions on the buildings, the Associated Press News agency reported.
Previous purchases of this kind by Jewish organisations have been met with angry Palestinian protests.
Local anger has been directed at members of the two Palestinian families which had owned the Mount of Olives property, although relatives say the sales were to Arabs who must have sold the buildings on.
A restaurant belonging to one family member was torched and another person was abducted to Ramallah for interrogation by the Palestinian security forces, according to a report in the Haaretz newspaper.
Land ownership in East Jerusalem is a particularly sensitive issue. The majority of its residents are Palestinian, and Palestinians hope to make it their future capital.
Israel says the whole of Jerusalem is its indivisible capital.
East Jerusalem, like the West Bank, has been occupied by Israel since 1967.
Israel annexed east Jerusalem in 1981, but its claim to the area is not recognised internationally.
Under the plan for further unilateral disengagement proposed by acting Prime Minister and Kadima party leader Ehud Olmert, East Jerusalem and large areas of the West Bank, especially the area around the city, would remain under Israeli control.URL: http://news.bbc.co.uk/2/hi/middle_east/4872938.stm
 Rice said the US had not discussed Israel's unilateral plan |
Condoleezza Rice said a negotiated deal with the Palestinians was preferable, but seemed unlikely since the militant group Hamas won Palestinian elections.
But she added that there had been no chance to discuss the Israeli proposal.
It is the first time the US appears to have dropped its insistence that the conflict must be solved bilaterally.
Ms Rice was speaking to reporters travelling with her to Berlin for talks about Iran's nuclear programme.
'No chance to talk'
Ms Rice pointedly did not rule out supporting Kadima's plan for withdrawing from parts of the occupied West Bank by 2010 but consolidating other Jewish settlements there.
Enlarge Map"I would not on the face of it say... that we do not think there is any value in what the Israelis are talking about," she said.
"But we can't support it because we don't know. We haven't had a chance to talk to them about what they have in mind," she stressed.
She referred to Hamas' victory on a platform of resistance to the Israeli occupation and opposing negotiated settlements.
"If you are going to have a negotiation you have to have partners and the Palestinian government does not accept the concept of a negotiated solution," Ms Rice said.
Coalition talks
After winning Tuesday's general election, Kadima will become the largest party in the next Knesset, although it will need at least two coalition partners to get a parliamentary majority.
Efforts to form a coalition will begin officially on Sunday, when the largely-ceremonial president, Moshe Katsav, will chair the first formal negotiations.
But Kadima's leader, Acting Prime Minister Ehud Olmert, has already insisted he will keep the powerful finance ministry in any new government, the Maariv newspaper has reported.
Such a stance could complicate negotiations with Kadima's most likely partner, the Labour party, which wants the finance portfolio to help it to reverse the extensive welfare cuts of recent years.
A senior Labour MP, Yuli Tamir, said not getting control of the ministry would be a red line for her party joining the government.
"There is no doubt that our demand for the Finance Ministry is a legitimate one and part of our world view," she told Israel Army Radio.
Kadima is expected to ask a number of other smaller parties to join its coalition, including the Pensioners' Party and the ultra-orthodox Shas and United Torah Judaism parties.
Mr Olmert was also called by the Palestinian leader, Mahmoud Abbas, who offered congratulations on his election victory.
The two men did not discuss the possibility of holding talks in the near future, a spokesman for the prime minister said.URL: http://news.bbc.co.uk/2/hi/middle_east/4860340.stm
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