A rare diplomatic spat has broken out between Israel and the US over planned Jewish settlement expansion in the West Bank, although officials and diplomats said on Wednesday it was unlikely to mar next week's summit between Ariel Sharon and President George W. Bush.

The dispute centres on a project, supported by the Israeli prime minister, to add two new neighbourhoods and around 3,500 new homes to Maale Adumim, three miles east of Jerusalem and, with 30,000 inhabitants, the largest settlement in the territory.