AP – Israeli officials said Monday that the U.S. is pressing Israel to scrap a contentious east Jerusalem building project whose approval has touched off the most serious diplomatic feud with Washington in years.

Competing Israeli and Palestinian claims to east Jerusalem were feeding tensions in the holy city, where Arabs and Jews maintain an uneasy coexistence and sometimes clash. Police were out in large numbers in the volatile Old City in expectation of renewed clashes.

Top U.S. officials have lined up in recent days to condemn the Israeli plan to build 1,600 apartments in east Jerusalem, the sector of the holy city that the Palestinians claim for their future capital.

The project caused a storm in Washington because it was announced during Vice President Joe Biden’s visit to the region last week, badly embarrassing the U.S. and complicating its efforts to restart Israeli-Palestinian peacemaking. The Palestinians immediately threatened not to join upcoming U.S.-brokered talks meant to jumpstart negotiations after a 14-month breakdown.

U.S. officials have not disclosed what steps they want Israel to take to defuse the crisis, and Israeli government spokesman Mark Regev refused to comment Monday. But Israeli officials, speaking on condition of anonymity because no official decision has been made public, said Washington wants the construction project canceled.

Although Israeli Prime Minister Benjamin Netanyahu has repeatedly apologized for the timing of the project’s approval, during Biden’s visit, he has not indicated he would be prepared to cancel it.

Netanyahu’s curb on east Jerusalem construction would threaten to fracture his hawkish coalition but it also does not stand to benefit from antagonizing its most important ally.