At the State Department, spokesman Mark Toner said the E1 plans are "especially damaging" to prospects for a resumption in Israeli-Palestinian peace talks.
The E1 area "area is particularly sensitive and construction there would be especially damaging to efforts to achieve a two-state solution," Toner said in a statement.
The fate of Jewish settlements is at the heart of the current four-year impasse in Mideast peacemaking. The Palestinians say continued settlement construction is a sign of bad faith, and they refuse to return to the negotiating table unless Israel stops the building. More than 500,000 Israelis now live in the West Bank and east Jerusalem.
Israeli officials say the Palestinians have negotiated with previous governments while settlement construction took place. They also note that even when Netanyahu imposed a 10-month partial freeze on construction in 2009 and 2010, there were no serious peace talks. Netanyahu says negotiations should begin immediately without any preconditions.
But last week's U.N. vote appears to have marked a turning point. While the U.S. and Europe have long opposed the settlements, their new condemnations used especially sharp language, and rarely are Israeli ambassadors publicly grilled.
Swedish Foreign Minister Carl Bildt told parliament that "together with other EU countries we will discuss other potential steps," though he would not elaborate.
British government officials said the EU would be looking to President Barack Obama for leadership on the matter, and that British diplomats were in touch with American counterparts in London.
One EU official in Brussels said the matter will be high on the agenda of a meeting of European foreign ministers next Monday, and will also be discussed with U.S. Secretary of State Hillary Rodham Clinton during a planned visit this week.
The British and EU officials all spoke on condition of anonymity because they were discussing internal deliberations, and no firm policy had been set.
Silke Temple, a Mideast expert at the German think tank DGAP, said the European reaction was "indeed harsher" than in the past. She said Germany was likely to raise the issue of settlements with Netanyahu during a visit this week.
"There certainly will be a message at this week's consultations that it is not helpful. Constructing settlements just isn't constructive," she said.
Officials in Britain, France, Spain, Sweden and Denmark all said that no specific threats were made during Monday's meetings.
Avi Primor, a former Israeli ambassador to Germany, said he didn't think Israel had reached a "new era" in relations with Europe quite yet. But he said there is a "long-term process of public opinion gradually turning against Israel."
"Public opinion simply cannot understand the Israeli policy in occupied territories, the refusal to have a genuine peace process. Eventually, this lack of understanding will surely have an influence on governments," he said.
The diplomatic process is likely to remain on hold in the coming weeks as Israel prepares for new parliamentary elections. According to opinion polls, Netanyahu is expected to win re-election as head of a hardline coalition dominated by pro-settler politicians. Netanyahu's tough public stance in recent days may be motivated, in part at least, at creating a strong image for Israeli voters.
Palestinian officials have indicated they will wait until after the Israeli election on Jan. 22 before deciding how to proceed with their newfound diplomatic status at the U.N. Officials say they hope Obama will present a new formula for resuming peace talks after the Israeli vote.
Lori Hinnant in Paris, Jill Lawless in London, Matthew Lee in Washington, Louise Nordstrom in Stockholm, Sweden, Juergen Baetz in Berlin and Lauren E. Bohn contributed to this report.