Reports of a decision by Israel to build 3,000 homes in east Jerusalem and the West Bank emerged Friday when an official source confirmed it was in retaliation for the Palestinians winning the rank of a UN non-member state a day earlier.
Media reports on Monday said France and Britain were considering recalling their ambassadors to Israel over the plans, but the French foreign ministry did not confirm this, saying only it was deciding on measures to "show its disapproval".
An Israeli emabssy spokesman said that Paris ambassador Yossi Gal had been summoned by the foreign ministry.
The British Foreign Office meanwhile said on Monday it was considering a "strong reaction" to Israel's plans to build new settler homes.
A diplomatic source said media reports about its ambassador were speculation and no decision has been taken, but it is thought to be an option.
The decision to build in a key area east of Jerusalem, called E1, sparked a storm of diplomatic protest from Washington and Brussels as well as from UN chief Ban Ki-moon, who on Sunday warned it would deal an "almost fatal blow" to the prospects of resolving the conflict.
E1 is a highly contentious area of the West Bank that runs between the easternmost edge of annexed east Jerusalem and the Maaleh Adumim settlement.
Palestinians bitterly oppose the project, as it would effectively cut the occupied West Bank in two, north to south, and sever it from Jerusalem, and make the creation of a viable Palestinian state even more problematic.