Israel has approved the construction of 3,000 new housing units in West Bank settlements, an Israeli official has said.
The announcement came a day after the United Nations recognised Palestine as a non-member observer state.
The Palestinians hope UN recognition of a Palestinian state in the West Bank, Gaza and east Jerusalem will help resume moribund Middle East peace talks.
Peace negotiations have been frozen for the past four years as the Palestinians have refused to negotiate while Israeli settlement construction continued.
Israel fiercely denounced the UN decision. It says peace can only come from direct negotiations and not unilateral moves.