US Secretary of State Marco Rubio has inaugurated a contentious archaeological tourism site led by an Israeli settler group in occupied East Jerusalem.

America's top diplomat was a guest of honour at the opening of the so-called "Pilgrimage Road", a tunnel excavated under Palestinian homes next to Jerusalem's Old City.

The opening ceremony took place at the City of David, a biblical tourism site operated by the Elad settler organisation in the Palestinian neighbourhood of Silwan.

Mr Rubio's presence was condemned by Palestinian rights groups as giving US backing to Israel's "grip of settlement" close to Jerusalem's most sensitive holy sites.

Residents of Silwan have for years faced eviction orders and home demolitions to make way for Jewish settlements and the expansion of the archaeological park, according to rights groups. Settlements are illegal under international law.

Mr Rubio described the excavation as "perhaps one of the most important archaeological sites on the planet", saying it had deep meaning to people in the United States. He earlier said he understood "people want to involve politics in it… But at the end of the day, it's an extraordinary archaeological site."

Silwan resident Fakhri Abu Diab, 63, said Mr Rubio was choosing to back extremists in the Israeli government instead of being on the side of international law.

"He is ignoring our [Palestinian] history. He isn't visiting when they are demolishing our homes, ethnic cleansing and kicking us out of here," he said.

Mr Abu Diab spoke to the BBC next to the mangled wreckage of his home, which was demolished last year at the order of Israeli authorities. Israel says such homes are built without permits, but these are almost impossible for Palestinians to obtain.

The City of David has been operated since the early 2000s by Elad, a settler group that has appropriated land, acquired Palestinian homes and pushed for the eviction of Palestinian families in Silwan, according to a July report by the UN's Independent International Commission of Inquiry on the Occupied Palestinian Territory.

Ze'ev Orenstein, director of international affairs at the City of David, told Reuters: "All the archaeological excavations are carried out by the Israel Antiquities Authority according to the highest standards." He declined to answer further questions.

The excavation is said to mark the route of a Roman-era street taken by pilgrims to the site revered by Jews as the location of two Biblical temples. According to Peace Now, an Israeli campaign group that supports Palestinian rights, the tunnel stretches 600 metres from Silwan, running beneath Palestinian homes and the Old City walls, ending close to the foundations of the Western Wall, part of the retaining structure of the compound which hosts al-Aqsa mosque. The site is known to Muslims as Haram al-Sharif and to Jews as the Temple Mount.

Peace Now called Rubio's visit "nothing less than American recognition of Israeli sovereignty over the most sensitive part of Jerusalem's Holy Basin". The group added: "[W]hat stands behind its opening is a trampling of Jerusalem as a city sacred to all faiths and belonging to all its residents."