Most countries view Israeli settlement activity as illegal and an obstacle to peace. Israel disagrees. Palestinians want an independent state in the West Bank, Gaza and East Jerusalem.
Israel's mission to the United Nations said funding would be cut to U.N. bodies it described as "anti-Israel."
May's spokesman said that Israel had coped for too long with the threat of terrorism and that focusing only on the settlements was not the best way to achieve peace between Jew and Arab.
Israel is still fuming over the resolution approved last Friday by the United Nations Security Council that demands an end to settlement activity.
Prime Minister Netanyahu says he has already cut off funding to five U.N. institutions in response to resolution demanding an end to settlements.
The Israeli prime minister supports a measure that would legalize Israeli settlement homes on private Palestinian land in the West Bank.
The further absorption of Palestinian land leads to one outcome: the geographic impossibility of a two-state solution.
The U.S. State Department accuses Israel of no longer being interested in a negotiated settlement.
The settlements are largely considered illegal by the international community.
Encouraged by AIPAC, Congress has been conducting a quiet campaign in support of Israeli settlements.
"I frankly do not know if it is already too late," outgoing U.N. Middle East envoy Robert Serry said.
The diplomatic delegation was coming to inspect vandalism to Palestinian-owned trees.
The land in question was captured by Israel in a 1967 war and annexed to Jerusalem in a move never recognized internationally.
Jerusalem's municipal planning committee authorised 50 new housing units in Har Homa and 28 in Ramot
France called on Israel to "immediately" reverse a decision to approve the building of 200 new settlements in East Jerusalem.
A week ago, Prime Minister Benjamin Netanyahu ordered plans for some 600 housing units for Ramat Shlomo and another 400 for Har Homa, another East Jerusalem neighborhood, to be advanced.
Israelis are questioning the timing of more building permissions in East Jerusalem
"It's American values that have led us to fund and build an Iron Dome system that protected the lives of countless innocent Israeli citizens," White House spokesman Josh Earnest said.
"This development will only draw condemnation from the international community, distance Israel from even its closest allies," a State Department spokesman said