"The presidency recalls that house demolitions, evictions and settlement activities in east Jerusalem are illegal under international law," the statement went on.
"In addition, the actions taken by the Israeli government contravene repeated calls by the international community, including the Quartet, to refrain from any provocative actions in East Jerusalem."
"These actions confirm a worrying trend that runs counter to the creation of an atmosphere conducive to achieving a viable and credible solution to the conflict between Israelis and Palestinians," the Swedish presidency said.
Israeli police evicted the two Palestinian families from their homes in the Sheikh Jarrah district of east Jerusalem on Sunday. The Supreme Court ordered the evictions following an appeal by the Nahalat Shimon International settler group which claimed Jewish settlers have title deeds for the properties, despite UN and Palestinian denials.
In Oslo, Norwegian Foreign Minister Jonas Gahr Stoere called the eviction of the Palestinian families "a breach of Israel's obligations under international law".
"The destruction of Palestinian homes and the construction of new settlements in East Jerusalem is jeopardising the peace process," Stoere said in a statement. He added that the international community has repeatedly urged Israel to "refrain from such provocative acts towards Palestinians" as "this is undermining the prospects for resolving the issue of Jerusalem within the frame of a two-state solution."