The Israeli prime minister's office says cabinet ministers have approved the construction of hundreds of apartments in major settlement blocs.
The decision comes days after five members of a family in a Jewish West Bank settlement were murdered in their sleep.
Palestinian militants are suspected in the killings.
It was not clear whether the approval referred to construction plans that already were in the pipeline or new proposals.
The knife attack on Friday killed two young children, a baby and their parents. It was the deadliest attack in years and came at a time when Israel is under pressure to launch a new peace initiative.
Israeli security forces are on alert for possible settler retaliation against Palestinians.