Israeli Defence Minister Moshe Yaalon on Sunday approved the return of Jewish settlers to a contested house in the flashpoint West Bank city of Hebron, his office said.
The supreme court ruled last month that settlers were the lawful owners of the building in the heart of the occupied Palestinian city, ending a legal dispute lasting nearly seven years.
"Following the court decision... Defence Minister Moshe Yaalon today (Sunday) approved habitation of the house," his office said in a statement.
It added that the area military instructor had been told to allow "a limited number of families to the house".
According to army radio, three Jewish families already moved in on Sunday afternoon.
A Palestinian negotiator, Mohammed Shtayyeh, condemned the Israeli move which he said prioritised settlements over the ailing peace process.
The decision would only add to the hardships of Palestinians in Hebron "who suffer all the time from terrorist acts by the settlers", he said.
An NGO set up by former members of Israel's military, Breaking the Silence, meanwhile, said it was the first time since 1980 that Israeli authorities give the green light for a new settlement in Hebron.
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It would results in new restrictions on Palestinian residents such as the closure of roads and shops, it said.
The Peace Now settlement watchdog condemned what it called a "sad decision from the ministry of defence to approve and support the most radical rightwing settlers and approve them a new settlement in Hebron."
The ministry "and the government showed again that they have no interest in the two-state solution and its negotiation," its spokesman Lior Amihai told AFP, referring to US-sponsored negotiations aimed at a two-state peace settlement.
The Rajabis, a Palestinian family, has for years said its four-storey building had been taken over fraudulently by Israeli settlers.
A lower court in 2012 accepted their claim, ruling that the settlers' assertion that they had legally purchased the property "does not hold water".
The supreme court overturned that judgment on appeal.
The building is near a contested holy site known to Muslims as the Ibrahimi Mosque and to Jews as the Cave of the Patriarchs in a tightly controlled Israeli enclave where many streets are off-limits to Palestinian cars.
The settlers were evacuated in 2008, and the supreme court ruling said they would not be allowed to move back in without defence ministry approval.
Hebron, home to nearly 200,000 Palestinians, also comprises some 80 settler homes in the centre of town for about 700 Jews who live under Israeli army protection.