JERUSALEM, OCT. 7 -- Prime Minister Yitzhak Shamir announced today that a new Jewish neighborhood will be built in Arab East Jerusalem and said that assurances given the United States by Israel last week about settlements in the occupied territories did not cover the city.

Appearing at the opening of a new Jewish seminary in East Jerusalem, which Israel captured from Jordan in the 1967 Middle East war, Shamir said the new neighborhood will be built between two of the city's principal landmarks, the Mount of Olives and Mount Scopus. Mount Scopus is already the site of Israel's Hebrew University, but the Mount of Olives is adjacent to several Arab neighborhoods.

Shamir's announcement, which took some Jerusalem city officials by surprise, appeared intended to reinforce his government's position on an agreement it concluded last week with the Bush administration on the construction of new housing. Under the agreement, which provides for U.S. guarantees of $400 million in loans, Israel pledged not to use American funds for construction in the occupied territories.

Israel has insisted that East Jerusalem, which it has annexed, is not part of the occupied territories, but no other country has recognized the annexation. Shamir said today that "Jerusalem is an integral part of Israel, and the building of the city will continue unhampered," Israeli radio reported.

Under a housing plan for immigrants approved by the government earlier this year, more than 2,000 units are to be built in Jerusalem, many of them in the eastern half of the city. According to Israel's interpretation of its agreement with the United States, the U.S.-backed loans could be used to fund some of that construction, officials here said.

The new neighborhood mentioned by Shamir does not figure in the city's immediate building plans and would apparently be in addition to construction already on the drawing boards, a city official said tonight. About 120,000 of the 350,000 Jews in Jerusalem already live in East Jerusalem neighborhoods built since 1967.

Jerusalem has been a sore point between President Bush and Shamir ever since Bush asserted U.S. opposition to the settlement of Soviet immigrants "in the West Bank and East Jerusalem" last February, prompting a political storm that helped precipitate the collapse of Shamir's ruling coalition with the left-wing Labor Party.

Israeli officials said that neither Secretary of State James A. Baker III nor any other U.S. negotiator mentioned Jerusalem in recent talks on Israeli assurances regarding the loan guarantees. Israel interpreted the lack of discussion on the issue as a sign that Washington would not raise further objections to its plan to build apartments in East Jerusalem for immigrants, officials said.