Russia expressed concern on Wednesday at Israeli plans to build 1,100 more homes in an East Jerusalem settlement.
"It is of special concern that decisions on such a sensitive issue are being taken during a crucial period for the future peace process," the Russian Foreign Minister said in a statement.
The move has drawn widespread international condemnation, including from the European Union and United States.
The Israeli Interior Ministry's announcement on Tuesday came just days after Palestinian leader Mahmoud Abbas applied for full state membership of the UN.
The UN Security Council is set to review the Palestinian bid later on Wednesday. The U.S. has pledged to veto it.
"Now, as never before, the sides are expected to make steps towards one another, not unilateral actions," the Russian statement read.
U.S. Secretary of State Hillary Clinton said the Israeli move was "counter-productive to our efforts to resume direct negotiations between the parties."
"As you know, we have long urged both sides to avoid any kind of action which could undermine trust, including, and perhaps most particularly, in Jerusalem, any action that could be viewed as provocative by either side," she said at the White House on Tuesday.
Catherine Ashton, EU foreign policy chief, said the plan "threatens the viability of an agreed two-state solution."
Almost 500,000 Jews live in settlements in the occupied West Bank and East Jerusalem.
