Palestinian workers on a construction site in the neighborhood of Pisgat Zeev in east Jerusalem, Sunday, Aug. 11, 2013. (Bernat Armangue/AP)

Israel approved building nearly 1,200 more settlement homes Sunday and prepared to release more than two dozen long-held Palestinian prisoners — highlighting an apparent settlements-for-prisoners trade-off that got both sides back to peace talks for the first time in five years.

Yet concerns were mounting, especially among Palestinians, that the price is too steep. Sunday’s announcement was Israel’s third in a week on promoting Jewish settlements on war-won lands that the Palestinians want for a state. It fueled Palestinian fears of an Israeli construction spurt under the cover of U.S.-sponsored negotiations.

In Israel, the most vocal protests came from relatives of those killed in attacks carried out by Palestinians slated for release.

Bereaved family members held up large photos of loved ones during a Supreme Court hearing on an appeal against the upcoming release. “Why are we releasing butchers now? What for?” asked Gila Molcho, whose brother, lawyer Ian Feinberg, was stabbed to death in 1993 by Palestinians who broke into a European aid office in Gaza City.

Israelis and Palestinians are to launch talks Wednesday in Jeru­salem, following a preparatory round two weeks ago in Washington. The United States envisions an agreement within nine months on the terms of a Palestinian state alongside Israel, including drawing a border, agreeing on security arrangements and deciding the fate of Palestinian refugees.

The Palestinians want a state to include the West Bank, the Gaza Strip and East Jerusalem, territories Israel captured in the 1967 Middle East war. But they are willing to swap some West Bank land for Israeli territory to allow Israel to annex some of the largest Jewish settlements. The dozens of settlements built since 1967 are home to about 560,000 Israelis.

The diplomatic paralysis of the past five years was largely due to disputes over the settlements, which are deemed illegal by most of the international community.

Palestinian Authority President Mahmoud Abbas has long insisted that he would resume talks only if Israel freezes settlement construction — which Israeli Prime Minister Benjamin Netanyahu has rejected. Abbas, under pressure from U.S. Secretary of State John F. Kerry, eventually dropped that condition for talks.

In exchange, Kerry won Israel’s agreement to release 104 Palestinian prisoners serving long sentences, many for involvement in killing Israelis.

The prisoners are to be freed in four stages during the negotiations, with the first group of 26 set for release Tuesday. Late Sunday, a group of cabinet ministers selected the 26 prisoners, whose names were to be published early Monday.

The announcement of new homes came from Israeli Housing Minister Uri Ariel, who said Sunday that he has given final approval for the construction of 1,187 apartments in settlements. Nearly 800 are in East Jerusalem; the rest are in the West Bank.

Netanyahu’s office said in a statement that construction was approved in areas that Israel expects to retain in any future peace deal. “It changes nothing and all of this happens on a day when Israel is agreeing to release prisoners in a confidence-building measure,” the statement said.

Palestinian officials responded angrily but stopped short of walking away from negotiations.

“It is clear that the Israeli government is deliberately attempting to sabotage U.S. and international efforts to resume negotiations,” said Palestinian negotiator Mohammad Shtayyeh. “Israel continues to use peace negotiations as a smoke screen for more settlement construction.”

Shtayyeh said the Palestinians would complain to the United States and Europe. The main U.S. mediator in the talks, Martin Indyk, met Sunday with Abbas at his compound in the West Bank city of Ramallah.

A week ago, Israel added more settlements to its “national priority” list of several hundred communities eligible for special government subsidies, making them attractive to Israelis seeking cheaper housing. Several days later, the government advanced plans for more settlement homes.

Some Palestinian commentators have criticized Abbas for returning to negotiations without Israel agreeing to a settlement freeze or recognizing the pre-1967 border as a baseline for talks.

— Associated Press