Secretary of State Hillary Clinton said Friday that Israel's announcement of new settlement construction in disputed territory in East Jerusalem was "insulting" to the United States.

The Israeli announcement came during Vice President Joe Biden's visit this week to Israel. It complicated U.S. efforts to set up so-called proximity talks between the Israelis and Palestinians, the latest attempt to nudge the two sides back toward talking directly.

Clinton said the United States' relationship with Israel is not at risk: "Our relationship is durable. It's strong. It's rooted in common values."

"But we have to make clear to our Israeli friends and partners that the two-state solution -- which we support, which the prime minister himself says he supports -- requires confidence-building measures on both sides," Clinton told CNN's Jill Dougherty. "And the announcement of the settlements the very day that the vice president was there was insulting."

The construction, announced Tuesday, will be in the Ramat Shlomo neighborhood, in disputed territory in East Jerusalem. The Israeli Interior Ministry denies that the territory is in East Jerusalem.

Biden arrived in Israel on Monday, meeting first with Israeli President Shimon Peres at his official residence in Jerusalem and then with Prime Minister Benjamin Netanyahu. Biden emphasized the close relationship between the United States and Israel as he met with Israeli leaders Tuesday, a visit that also touched on relations with the Palestinians and Iran.

However, later Tuesday, after getting word of the settlement announcement, Biden said the United States condemned Israel's decision to build 1,600 housing units in the Jerusalem neighborhood, calling it "a step that undermines the trust we need right now."

The Israeli Interior Ministry said the construction plan was approved by a district committee, and the public can express objections to it over the next 60 days.

"I mean, it was just really a very unfortunate and difficult moment for everyone -- the United States, our vice president who had gone to reassert our strong support for Israeli security -- and I regret deeply that that occurred and made that known," Clinton said Friday.

She added that she has no reason to believe that Netanyahu knew about the announcement during Biden's visit but added, "He is the prime minister. Like the president or secretary of state ... ultimately, you are responsible."

The controversy over Israel's announcement came just a day after the Obama administration's special envoy for Middle East peace announced that Israeli and Palestinian leaders had accepted indirect talks.

George Mitchell said Monday that the two sides, with him acting as intermediary, had begun to discuss the "structure and scope" of the talks.

"I will return to the region next week to continue our discussions," Mitchell said. "As we've said many times, we hope that these will lead to direct negotiations as soon as possible."

Negotiations between Palestinians and Israelis have been stalled for more than a year, despite the Obama administration's attempt to move toward a resolution of the decades-old Israeli-Palestinian conflict.

Under current agreements between Israel and the Palestinian Authority, Israel maintains full control over the West Bank and its borders while the Palestinian government oversees administration of major population centers.

Speaking at a Christians United for Israel convention in Jerusalem on Monday, Netanyahu said he welcomes "the initiation of the peace process between us and the Palestinians."

"We have been calling to resume the talks without prior conditions for almost a year now," he said. "I hope that the proximity talks will soon lead to direct talks."

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