Tanaiste Eamon Gilmore has condemned plans by the Israeli government to build almost 1,300 new settler homes on Palestinian territory.
The foreign affairs minister branded the move an unacceptable unilateral action and reiterated the Irish Government's position that all settlements on occupied lands are illegal.
Mr Gilmore said: "This massive expansion of settlement construction clearly undermines the viability of the two-state solution. It is an unacceptable unilateral action by Israel which places a further obstacle in the way of the achievement of a negotiated political settlement.
"Ireland and its partners in the international community reaffirm that all settlement construction in the occupied Palestinian Territory is illegal."
The Tanaiste condemned Israel after it published tenders for the construction of 1,285 settlement housing units earlier this week. It is planning new settlements in Ramot and Pisgat Zeev in occupied East Jerusalem and the West Bank area of Ariel.
Mr Gilmore said: "Such action is damaging to the cause of peace and to Israel's international reputation. It calls into question the stated commitment of the Israeli Government to support peace and the establishment of a Palestinian state.
"I have repeatedly made clear that I wish to see substantive negotiations resume at the earliest opportunity. It is only through such negotiations that a comprehensive peace agreement and the reality of two states, Israel and Palestine, living side by side in peace and security, can come into being.
"This decision by the Israeli Government underscores the urgency of ceasing all actions hostile to the attainment of a two-state solution and to the resumption of substantive negotiations."
The Palestinian Authority is said to be considering an application to the United Nations to be recognised as an independent state.
Palestine was granted membership of cultural and heritage body Unesco last year.