Israel plans to build around half of a total of 1,400 new settlements in the West Bank and East Jerusalem.
Though widely expected, Israel’s announcement on Friday came just days after US Secretary of State John Kerry visited the region in a bid to reenergise the peace process.
Palestinian officials insist the latest Israeli move is a clear commitment to destroy those efforts.
“This is a violation for all the agreements that have been already signed before and this is also a message to the international community that the current Israeli government is not really responding to the international efforts for a two-state solution,” said Palestinian government spokesman Ihab Bseiso.
In his 10th trip to the region in less than a year, Kerry urged both sides last week to make tough choices to reach a peace deal.
During his three days of shuttle diplomacy, Kerry said he believed progress had been made following talks with Palestinian President Mahmoud Abbas and Israeli Prime Minister Benjamin Netanyhu.
Well over 500,000 Jewish settlers live in East Jerusalem and the West Bank.
Most countries consider Israel’s settlements there illegal.