Most countries view Israeli settlement activity as illegal and an obstacle to peace
* New settlement first approved in more than two decades
* White House appears accommodating
* Israel says will limit construction in settlements (Adds White House comment, Israeli signal on construction curbs)
UNITED NATIONS, March 31 (Reuters) - United Nations Secretary-General Antonio Guterres is disappointed and alarmed by Israel's decision to build a new settlement on land the Palestinians seek for a state, his spokesman said on Friday.
Israel's security cabinet on Thursday approved the building of the first new settlement in the occupied West Bank in two decades, even as Prime Minister Benjamin Netanyahu negotiates with Washington on a possible curb of settlement activity.
"The Secretary-General has consistently stressed that there is no Plan B for Israelis and Palestinians to live together in peace and security," U.N. spokesman Stephane Dujarric said in a statement.
"He condemns all unilateral actions that, like the present one, threaten peace and undermine the two-state solution," he said.
The White House appeared more accommodating to Israel's plans for the new settlement, intended for some 40 families evicted from Amona, a West Bank outpost razed in February because it was built on private Palestinian land.
A White House official noted Netanyahu had made a commitment to the Amona settlers before Trump and the Israeli leader had agreed to work on limiting settlement activity.
Trump, who had been widely seen in Israel as sympathetic towards settlements, appeared to surprise Netanyahu during a White House visit last month, when he urged him to "hold back on settlements for a little bit."
The two then agreed that their aides would try to work out a compromise on how much Israel can build and where.
"The Israeli government has made clear that Israel's intent is to adopt a policy regarding settlement activity that takes President Trump's concerns into consideration," a written statement from the official said.
Following Thursday's announcement, Israeli officials said Netanyahu's security cabinet decided out of respect for Trump's peace efforts to limit construction in settlements to existing, built-up areas and not to expand construction beyond present boundaries.
The decision did not appear to be coordinated with Washington.
U.S. and Israeli officials completed a round of talks on the settlements last week without agreement, saying the discussions were ongoing, and the two sides have yet to announce any final understanding on the issue.
Trump's Middle East envoy, Jason Greenblatt, this week wrapped up a second trip to the region aimed at reviving peace talks that collapsed in 2014.
Palestinians want the West Bank and East Jerusalem for their own state, along with the Gaza Strip.
Most countries view Israeli settlement activity as illegal and an obstacle to peace. Israel disagrees, citing biblical and historical ties to the land it captured in the 1967 Middle East war, as well as security concerns.
The U.N. Security Council adopted a resolution in December that demanded a halt to settlement building.
(Reporting by Michelle Nichols; Maayan Lubell in Jerusalem and Matt Spetalnick in Washington; Editing by Bernadette Baum)
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