Israel says it will build 3,000 new homes for Jewish settlers in the occupied West Bank.
The aim was to fulfil demands for housing and "return to normal life", the defence ministry said.
A Palestinian official condemned the move and warned that chances for peace were being destroyed.
It is the third such announcement by Israel since US President Donald Trump took office. Mr Trump has hinted he will be more supportive on the issue.
The announcement came as Israeli security forces started evicting hardline settlers from an illegal outpost.
Thousands of soldiers and police have been sent to Amona, which the Israeli Supreme Court says must be evacuated because it is built on private Palestinian land.
More than 500,000 Jews live in about 140 settlements built since Israel's 1967 occupation of the West Bank and East Jerusalem. The settlements are considered illegal under international law, though Israel disputes this.
There are also more than 95 outposts - settlements built without official authorisation from the Israeli government - across the West Bank.
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Tuesday's announcement follows on from the recent approval of 2,500 housing units in the West Bank and 550 in East Jerusalem.
The BBC's Yolande Knell in Jerusalem says that although many members of the Israeli governing coalition strongly support settlements, they have been unable to prevent plans to demolish the homes of about 50 Israeli families at Amona.
Located on a hilltop near the settlement of Ofra, north-east of Ramallah, the illegal outpost was built in 1996 on land registered as privately-owned by Palestinians
In 2006, following a decision by the Israeli Supreme Court, nine permanent structures in the outpost were demolished, sparking clashes between settlers and security forces.
In December 2014, the court ordered the Israeli government to completely remove Amona within two years. But the deadline was recently extended until 8 February.
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