Israel's Supreme Court has dismissed a Palestinian petition that sought to end discriminatory housing policies in the occupied West Bank and would have returned local planning rights to the Palestinians.
The ruling, handed down Tuesday, was in response to a petition filed by the West Bank village of Ad-Deirat, the Israeli NGO Rabbis for Human Rights and another three organisations.
The case relates to Israel's iron grip on all planning matters in what is known as "Area C" -- which covers more than 60 percent of the occupied West Bank -- where it is all-but-impossible for Palestinians to obtain building permits.
The result is wide-scale "illegal" construction, which is then demolished by Israel in a policy that has drawn widespread condemnation.
The petitioners had sought to return planning rights to the Palestinians, thereby curbing the need for illegal construction and halting hundreds of house demolitions that Israel carries out every year in the West Bank.
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They also presented evidence to show that a two-tier planning system based on ethnic-national background exists in the West Bank: a civil and representative planning system for Jewish settlers, and a military system without representation for Palestinians.
But the judges rejected the claim of discrimination, and said they were satisfied that a state proposal to engage in consultations with the local population would answer the problems.
Rabbis for Human Rights blasted the ruling as "legitimising a regime of separation and discrimination."
"With this decision, the court has strengthened military control over the lives of millions of Palestinian residents at all levels of life in the West Bank," a statement said.
"A regime of separation and discrimination is amongst the darkest of possible regimes and the court, in its ruling, missed this opportunity to stop the abuse of government (and military) power."
UN figures show there are 298,000 Palestinians living in Area C alongside 341,000 Israelis in 135 settlements and another 100 or so outposts.