The warning by the White House is a break from President Donald Trump's previous defence of Israeli settlement construction.
President Donald Trump on Thursday said Israel's construction of new settlements "may not be helpful" to Middle East peace efforts.
The tone was at odds with Trump's earlier position on the issue. Before taking office, he criticised the Obama administration for not vetoing a UN Security Council measure that condemned the settlements.
On Thursday, the White House said, "While we don't believe the existence of settlements is an impediment to peace, the construction of new settlements or the expansion of existing settlements beyond their current borders may not be helpful in achieving that goal."
Trump had been seen as sympathetic to Israeli Prime Minister Benjamin Netanyahu's plans to expand settlement building.
The Israeli government has approved a slew of new settlement constructions since the US president took office on January 20.
It recently unveiled plans for 3,000 new homes for Jewish settlers in the occupied West Bank.
Most of the international community considers the settlements to be illegal.
As Gregg Carlstrom explains to TRT World, Israeli politicians are likely to be surprised by Trump's move.