'Palestine can now sue Israel for illegal occupation'. (VIDEO)

The U.S. has criticized Israel for approving settlement expansion directly after the UN recognised Palestine as a non-member observer state. Washington says its a step back for peace talks.

3-thousand new settler homes have been given the go ahead in the West Bank and East Jerusalem less than 24 hours after the UN vote. Israel has accused the Palestinians of seeking unilateral recognition and not a solution through talks.

The Palestinians in turn demand that all settlement building is stopped before negotiations resume. 138 states voted to upgrade Palestine's status, with 9, including the U.S. voting against and 41 abstaining.

Political analyst Phyllis Bennis says the Palestinians could now take action against Israel through global institutions.