Israel's interior ministry has approved the construction of a military academy on land in the Mount of Olives in Arab east Jerusalem, Israeli activists and officials told AFP on Wednesday.
The plan is likely to spark controversy and has already been dubbed a "provocation."
"This project to construct a national defence college in Jerusalem was voted on a month ago by the Jerusalem municipality planning committee and another interior ministry committee confirmed it on Monday," Pepe Alalu, a council member in the Holy City, told AFP.
The public has 60 days to appeal the plan before it can be formally approved.
"There's little chance that an appeal will be accepted by the interior ministry given that Prime Minister Benjamin Netanyahu supports this project," said Daniel Seidemann, director of the NGO Terrestrial Jerusalem.
The project, which calls for an academy for officers is likely to stoke controversy, with the Palestinians objecting to any Israeli construction in east Jerusalem.
Israel captured the eastern half of the city during the 1967 Six Day War and later annexed it in a move never recognised internationally, but the Palestinians want the east of the city for the capital of their future state.
The project constitutes "a provocation that could deal a new blow to the chance of engaging in dialogue (with the Palestinians) on the future of the city," Alalu said.
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"It would be better to build a school on the site rather than an Israeli military college," he added.
Seidemann, whose NGO tracks developments in Jerusalem that could affect the peace process, including settlement construction, also criticised the plan.
He condemned the decision to choose "a site as sacred as the Mount of Olives to build a military academy."
The plan "cannot fail to produce opposition from Christian churches, even those best disposed towards Israel," he said.
Several important churches are located on the Mount of Olives, which holds religious significance for Christians, who believe Jesus Christ was arrested there before his crucifixion.
The Mount of Olives also holds religious significance for Jews, who believe the Messiah will arrive at the site.
Seidemann warned that building the academy in east Jerusalem would isolate Israel, attract criticism from governments around the world, and could even produce a boycott by foreign militaries.
"Not a single one of them will place a foot there, so this initiative will further isolate Israel," he said.
According to the Jerusalem Post, the college will cover a 42,000 square metres.