Israel gave approval Wednesday for the construction of 172 new homes for Jewish settlers in annexed east Jerusalem, a city councillor said, nearly two weeks after it announced thousands.
"The municipality approved this morning the construction of 172 apartments in Har Homa," Jerusalem city councillor Yosef Pepe Alalu of the leftwing Meretz party, who opposes settlements, told AFP.
"This is the final stage before construction, and is the continuation of a policy that harms the peace process."
Israel unveiled plans on June 5 for 3,200 settler homes in east Jerusalem and the occupied West Bank, in retaliation for the formation of a Palestinian unity government backed by the Jewish state's foe Hamas.
That announcement drew furious reaction from the Palestinians and the international community, with UN chief Ban Ki-moon saying he was "deeply concerned" and urging Israel to freeze its settlement activity.
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Wednesday's approval came as Israel was engaged in a huge crackdown on Hamas, accusing the Islamist movement of kidnapping three missing Israeli teenagers in the West Bank.
Prime Minister Benjamin Netanyahu has urged the international community to press Palestinian president Mahmud Abbas to end his reconciliation deal with Hamas, citing the kidnapping as proof the movement's "terrorist" activities make it an unsuitable political partner.
Israel's settlement building is viewed as a key obstacle to a peace deal with the Palestinians.
When nine months of US-backed peace talks collapsed in April, officials in Washington placed a large portion of the blame on Israel pushing through plans for thousands of settler homes during negotiations.
The Palestinians have pledged to seek an anti-settlement resolution at the UN Security Council for the first time in more than three years.