Israel on Wednesday announced new construction in east Jerusalem _ an area the Palestinians demand for their future state _ just hours after it freed a group of Palestinian prisoners as part of a deal to set in motion peace talks.

The building is seen as an attempt by Prime Minister Benjamin Netanyahu to make up for the prisoner release, for which he has been sharply criticized at home. The prisoners were jailed for deadly attacks on Israelis.

Interior Ministry spokeswoman Lital Apter said on Wednesday that four projects are being promoted, including 1,500 housing units in Ramat Shlomo in east Jerusalem and development of an archaeology and tourism site near Jerusalem's sensitive Old City.

The release of 26 Palestinians after midnight Tuesday was the second of four prisoner releases meant to restart Israeli-Palestinian talks in an effort to reach a final agreement between the two sides.

The Palestinians had long refused to resume peace negotiations with Israel unless it ends construction in territories that Palestinians seek for their state. Israel refused, insisting that settlements and other core issues, including security, should be resolved through negotiations.

The prisoner release was part of an agreement brokered by U.S. Secretary of State John Kerry, which brought Israel and the Palestinians back to the negotiating table after a five-year hiatus. The talks had been paralyzed since 2008.

Earlier this year, Kerry managed to persuade Palestinian President Mahmoud Abbas to drop the settlement issue as a condition for restarting negotiations. In exchange, Israel agreed to the prisoner release.

In all, 104 Palestinian convicts are to be released in four rounds over the coming months.

The east Jerusalem construction move angered the Palestinians but it was not immediately clear if it would directly impact the talks, which are taking place behind closed doors and away from the public eye, which both sides had agreed to.

Nabil Abu Rdeneh, a spokesman for Palestinian President Mahmoud Abbas condemned the move, saying that "it is destructive to the peace efforts and will only lead to more tensions."

Thousands of Palestinians have been held in Israeli prisons since Israel's capture of the West Bank, Gaza and east Jerusalem in the 1967 Mideast war, many jailed on charges ranging from throwing rocks to killing civilians in bombings, shootings and other attacks. The Palestinians want those territories for their future state. The prisoners released in the latest batch were all held by Israel for murder.

Israel has a long history of lopsided prisoner exchanges with its Arab adversaries. But this week's release appeared especially charged because Israel is receiving little in return except for the opportunity to conduct negotiations that few people believe will be successful.

Danny Danon, a hawkish minister from Netanyahu's Likud party condemned the release in an interview with Israel Radio. "It is tough to see terrorists celebrate when their place is either under the ground or in jail," Danon said, adding that the release sends the wrong message to young Palestinians.

The fate of the prisoners is a deeply emotional issue in Palestinian society. After decades of fighting Israel, many families have had a member imprisoned and the release of prisoners has been a longstanding demand. Israelis mostly view them as terrorists because of the Palestinians grisly attacks on Israelis including civilians.

Among those freed Wednesday were prisoners jailed for the killings of Israelis, including a reservist and a Nazi death camp survivor, according to a list provided by Israel's prison service. Many of the killings occurred before the beginning of Israeli-Palestinian peace talks in 1993.

Critics, including dovish members of his coalition, said Netanyahu could have avoided the release if he had accepted Palestinian calls to stop construction of West Bank settlements or base negotiations over the borders of a future Palestinian state on Israel's pre-1967 lines.