Today about 400,000 Jewish settlers are living on 125 settlements and 100 outposts in the Israeli-occupied West Bank, not including East Jerusalem, which is also considered occupied under global law.
The Palestinians claim the West Bank and east Jerusalem, areas captured by Israel in 1967, as parts of a future state.
The move late on Thursday - considered illegal under worldwide law - was adopted less than a week after the United Nations criticised Israel for not taking any steps to halt settlement building on occupied Palestinian territory, as demanded by the Security Council in a resolution it passed in December.
"Israel is more committed to appeasing its illegal settler population than to abiding by the requirements for stability and a just peace", she said.
Prominent U.S. lawyer Alan Dershowitz said in an interview Thursday that President Donald Trump spoke to him "clearly" about a two-state solution to the Israeli-Palestinian conflict, suggesting a shift in Trump's stance. However, if legal, security or topographical limitations do not allow adherence to those guidelines, new homes will be built outside the current settlement boundaries but as close as possible to them. "Once upon a time, the Middle East was full of Jews", he said.
"With these actions Israel has shown that it aims to reinforce the odious Israeli occupation", Palestinian Authority government spokesman Yousif Mahmoud told Wafa, the official Palestinian Authority news agency. For years, Israeli settlements cropped up all around that land.
Israel's government gave the green light despite talks with Washington on possibly curbing settlement activity.
Oded Revivi, chief foreign envoy of the Yesha Council, an umbrella group representing Israel's more than 120 West Bank settlements, welcomed the new settlement.
With the new policy, the government said it would attempt to exercise some restraint in expanding the physical footprint of settlements, though it did not specify any slowdown in construction.
"I promised to create a new community and we are going to respect that commitment and create it today", Netanyahu said in a statement from his office ahead of an expected meeting of his security cabinet in the evening.
"While the existence of settlements is not in itself an impediment to peace, further unrestrained settlement activity does not help advance peace", a White House official said. It appears to have been a successful effort, as United States officials told the Israeli press that Trump accepts the new settlement as an "exceptional" case.
Israel says the status of settlements as well as other issues, such as security, should be resolved in peace talks.