The United States vetoed a U.N. resolution Friday that would have condemned Israeli settlements as "illegal" and called for an immediate halt to all settlement building.
The 14 other Security Council members voted in favor of the resolution.
"The American veto does not serve the peace process and encourages Israel to continue settlements, and to escape the obligations of the peace process," Nabil Abu Rdainah, a close aide to Palestinian President Mahmoud Abbas, said in Ramallah. "This veto will complicate matters in the Middle East," he told Reuters after the vote at the United Nations in New York.
Abbas came out of his office to meet hundreds of supporters.
"What we have sought and what we are seeking is that the occupiers leave our country so that we can build our independent Palestinian state with Jerusalem as its capital," he told them. "We will not accept settlements regardless of their shape."
The United States vetoed the resolution after personal appeals to Abbas by President Barack Obama and Secretary of State Hillary Clinton failed to persuade the Palestinian leader to withdraw it or accept a non-binding motion chiding Israel over the settlements.
Israeli Prime Minister Benjamin Netanyahu said in a statement Israel "deeply appreciates" the U.S. decision to veto the resolution.
Israeli Ambassador Meron Reuben, opposing the resolution, urged the Palestinians to "return to negotiations without preconditions."
U.S. Ambassador to the United Nations Susan Rice told council members that the veto "should not be misunderstood to mean we support settlement activity." She added that the U.S. view is that Israeli settlements lack legitimacy.
But she said the draft "risks hardening the position of both sides" and reiterated the U.S. position that settlements and other contentious issues should be resolved in direct peace negotiations between the Israelis and Palestinians.
British Ambassador Mark Lyall Grant, speaking on behalf of Britain, France and Germany, condemned Israeli settlements in the West Bank. "They are illegal under international law," he said.
He added that the European Union's three biggest nations hope that an independent state of Palestine will join the United Nations as a new member state by September 2011.
The Palestinian Authority earlier Friday decided to insist that the resolution be put to the council, and rejected an offer from the United States of a council statement containing weaker language on settlements.
Since 2000, 14 Security Council resolutions have been vetoed by one or more of the five permanent members — Britain, China, France, Russia and the United States.
The Palestinians have said repeatedly that they will not resume peace talks until Israel halts settlement building in the West Bank and East Jerusalem, which the Palestinians want as their capital.
Israeli-Palestinian peace talks collapsed just weeks after they restarted in September because Israel ended a 10-month moratorium on settlement construction.
The U.N. vote came a day after Obama and Palestinian President Mahmoud Abbas spoke by telephone, according to Palestinian Authority spokesman Nabil Aburdeneh. They discussed the uprisings in Egypt and Tunisia and the resolution on settlements, he said.