CAIRO, September 10 (RIA Novosti) - Arab countries see no reason to normalize relations with Israel as Tel Aviv continues building illegal settlements on the occupied Palestinian land, Arab League head Amr Moussa said on Wednesday.

"The issue of normalizing relations with Israel has been closed," Moussa told journalists following a session of the League of Arab States at the level of foreign ministers.

Israeli Defense Minister Ehud Barak sanctioned on Monday the construction of 455 new homes in Israeli settlements in the West Bank. This was the first new government-approved construction project in the West Bank since Prime Minister Benjamin Netanhyahu took office in March and is in defiance of U.S. pressure to halt all building work.

The issue of Jewish outposts has become the main obstacle to reviving peace talks with the Palestinians, and a sticking point in relations with the United States, Israel's main strategic ally.

Under the internationally agreed roadmap for Middle East peace, Israel is obliged to freeze all settlement construction activity and remove unauthorized outposts built since 2001. Palestinian President Mahmoud Abbas has demanded Israel freeze the construction of settlements as a pre-condition for the resumption of peace negotiations.