"I was deeply concerned to hear the latest announcement by the Israeli authorities to advance settlement plans once more," Catherine Ashton said in a statement on Saturday.
She added the settlements were "illegal under international law, constitute an obstacle to peace and threaten to make the two-state solution impossible".
She once again urged Israel to put an end to its settlement building calling the current efforts at peace talks a "unique opportunity" for both sides.
On Friday, Tel Aviv unveiled proposals for 1,076 units in annexed east al-Quds and 801 in the occupied West Bank, a move which is highly seen as discouraging to latest efforts to find a solution for ending Israeli-Palestinian conflict.
The announcement comes a week after US Secretary of State John Kerry visited the region in his latest attempt over the Middle East peace, which was left fruitless.
Kerry’s 10th trip was clouded by what Palestinians expressed as the Israeli regime of lacking commitment to build peace after decades of conflict.
RA/SHI