Israel is preparing for a huge expansion of the Itamar settlement in the northern West Bank, the Peace Now settler watchdog said on Monday.
The plan, which has yet to be approved, would see Itamar expanding five-fold from 137 homes to 675.
According to Peace Now spokesman Lior Amihai, a defence ministry committee was to convene on Wednesday to start preparing plans for adding 538 homes.
"We see this as very dramatic," he told AFP. "To enlarge it to 675 is to enlarge the settlement to almost five times its size."
The defence ministry said the meeting was primarily about approval for buildings already in place, and stressed that plans for new construction had not yet been approved.
"Regarding construction beyond what exists now, the defence ministry must provide further approval," it said in a statement. "There is currently no approval for any further construction."
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Although several further stages were required until permission to build could be granted, the scheme appeared to be more than theoretical, Amihai said.
"If the defence ministry just wanted to authorise the existing buildings it would not need to make such a grandiose plan," he said.
In March 2011, an Israeli couple and their three young children living in Itamar were killed in a grisly murder, with two Palestinians convicted for the attack.
Since then, settler leaders have been pushing for the settlement to be expanded, media reports said.
Observers also suggested the plans to enlarge the settlement could be linked to an upcoming Palestinian bid, forcefully opposed by Israel and the United States, to secure upgraded membership at the United Nations.
In November 2011, Israel decided to speed up construction in annexed east Jerusalem and other areas to punish the Palestinians for winning membership in the UN cultural agency UNESCO.
Last Tuesday, Israel published tenders for 1,213 new settler homes in east Jerusalem, prompting the Palestinians to say it made them more determined to seek greater UN status.