There has been international condemnation of Israel's announcement that it plans to increase the number of settlements in the Golan Heights.
The plan will see the population rise by 50% over three years
Israel says it will build 900 new homes on the Syrian plateau it occupied during the 1967 Middle East war.
France urged Israel to drop the plan, saying it flouted international law and compromised the peace process.
A Syrian Government minister said the move showed Ariel Sharon's government was an obstacle to peace in the region.
The $60m plan will see the population in the occupied Golan Heights rise by 50% over three years.
Israeli Agriculture Minister Yisrael Katz said: "The aim is to send an unequivocal message: the Golan is an integral part of Israel."
Syria has reacted angrily to the latest move, saying sovereignty should be resolved by international law, not military power.
Syrian President Bashar al-Assad has only recently called for renewed talks over the possible return of the Golan.
Correspondents say the move is a slap in the face to President Assad, whose attempt to restart negotiations comes after four years of deadlock.
There has been no reaction yet from the United States - which is struggling to revive the wider Middle East peace process.
But the French Foreign Ministry called "with insistence" on Israel "not to put this project in place".
And it urged Mr Sharon not to "take any other measure that could compromise the peace process".
Damascus - which wants a total Israeli withdrawal from the occupied territory - reacted angrily to the announcement.
"Israel is deluded that it can achieve something by relying on power and occupation," said deputy Foreign Minister Isa Daweesh.
He said that conflicts "are not resolved through power; they should be resolved under international law".
But Mr Katz said Damascus "on one hand announces that it is interested in peace, and on the other hand openly supports Palestinian terror".
In comments published by the Yediot Ahronot daily, he added: "The goal is for al-Assad to see from the windows of his home the Israeli Golan thriving and flourishing."
Syria denies that it supports terrorism, saying Palestinian militant groups had only information offices in Damascus and even those had been shut down.
Israel's presence on the Golan is military as well as civilian
Syrian Government minister Dr Bouthaina Shabban told the BBC's Newshour programme: "Every time we speak about comprehensive peace in the region, (Israel's) response is to build more settlements."
In a televised address, Palestinian leader Yasser Arafat said: "This Israeli Government... does not work towards resuming the peace process and does not want to implement the roadmap or come back to the negotiations table."
His words followed an Israeli air strike in Gaza City on Tuesday, that targeted a Hamas leader.
There are currently 31 settlements in the Golan Heights with about 10,500 inhabitants.
The Heights were occupied by Israel during the 1967 Arab-Israeli war and were annexed in 1981.
They are a grassy plateau overlooking north-eastern Israel and south-east Syria and have important water resources - providing Israel with a third of its water needs.
On Tuesday, reports in Israel said a member of Prime Minister Ariel Sharon's Likud party had been invited to Damascus to discuss a standing offer from Syria to renew peace talks between the sworn enemies.