The White House said Wednesday it was "deeply disappointed" that Israel decided to speed up settlement building after UNESCO decided to admit the Palestinians, boosting their statehood drive.

"We are deeply disappointed by yesterday's announcement about accelerated housing construction in Jerusalem and the West Bank," said White House spokesman Jay Carney.

EU foreign policy chief Catherine Ashton urged Israel on Wednesday to backtrack on its decision to accelerate building of new settlements in response to Palestinian accession to UNESCO.

"I am deeply concerned by the latest Israeli decisions to expedite settlement activities in response to Palestinian accession to UNESCO," Ashton said in a statement.

Hizbullah has congratulated the Palestinians on winning UNESCO membership, slamming the United States as "racist" over its decision to vote against the move.

"Hizbullah congratulates the Palestinian people on gaining full UNESCO membership, which is their natural right," the Shiite group said.

Palestinian leaders reacted angrily after Israel said it would build 2,000 settler homes and freeze the transfer of Palestinian tax funds to punish them for joining UNESCO.

Israeli Prime Minister Benjamin Netanyahu's inner cabinet decided on Tuesday to speed up construction in east Jerusalem and in nearby settlements, a day after UNESCO's general assembly voted Palestine in as a full member.

Israeli Prime Minister Benjamin Netanyahu has called a meeting of his inner cabinet on Tuesday to consider a response to UNESCO's decision to admit Palestine, officials and local media said.

Israeli media said the so-called Forum of Eight would meet on Tuesday afternoon to discuss a response to UNESCO's decision a day earlier to admit Palestine as a full member despite U.S. and Israeli objections.

Palestinian President Mahmoud Abbas hailed UNESCO's acceptance of Palestine as a full member on Monday as "a victory" for his people's rights, at the White House condemned the step describing it as "premature."

"Accepting Palestine into UNESCO is a victory for (our) rights, for justice and for freedom," his spokesman Nabil Abu Rudeina quoted him as saying in a phone call from Amman.

Palestinians won a crucial vote to enter UNESCO as a full member on Monday, scoring a symbolic victory in their battle for statehood ahead of a similar vote at the U.N. General Assembly in New York, as the U.S. said it is stopping financial contributions to the U.N. body over the step.

"The general assembly decides to admit Palestine as a member of UNESCO," said the resolution adopted by 107 countries, with 14 voting against and 52 abstaining.

The bodies of two Palestinian militants killed overnight in an Israeli raid on Gaza were found at dawn on Monday near Khan Yunis, local medics said.

The two belonged to a tiny faction known as the al-Ansar Brigades, which is understood to be close to Gaza's ruling Hamas movement.

A new Egyptian-brokered truce between Israel and the armed Palestinian groups in Gaza has been reached, a Palestinian source announced, after an Israeli air strike killed a Gaza militant on Sunday just hours after Islamic Jihad vowed to observe an earlier ceasefire.

“The Palestinian factions have been informed that the truce with Israel will be maintained though a new ceasefire effective 10:00 pm,” the source said, requesting anonymity.

Israeli air raids killed seven Islamic Jihad militants in the Gaza Strip on Saturday, prompting a massive barrage of retaliatory rocket fire, officials said.

Adham Abu Selmiya, spokesman for Gaza's emergency services, said five members of the al-Quds Brigades, Islamic Jihad's armed wing, were killed and three critically wounded in a first Israeli attack.