A report commissioned by Israeli Prime Minister Benjamin Netanyahu recommends the government legalise outpost settlements established without permits, Israeli media said on Monday.
It also says that Israeli settlement construction in the West Bank is not illegal, despite the opinion of the vast majority of the international community to the contrary.
The report was written by three prominent Israeli jurists, including former Supreme Court judge Edmund Levy, who were asked by Netanyahu to examine the status of dozens such outposts in January.
The 89-page document underlines that while the outposts were built without proper permits, the involvement of government offices and ministries provided "implied agreement" for their construction, the Jerusalem Post reported.
The international community considers all settlements built in the West Bank and east Jerusalem to be illegal because they are built on territory Israel occupied during the 1967 Six Day War.
But the Israeli government has traditionally distinguished between settlements built with all the required permits and permission and outposts constructed without them.
The panel's findings were submitted to the ministerial committee on settlements on Sunday.
According to public radio, the document said successive governments had acted "in total bad faith, asserting on the one hand that these settlements were built illegally, while encouraging their construction."
The report said outposts built on state land or land purchased from Palestinians "can be legalised without the government taking any new decision because they were constructed with its agreement and encouragement."
"Israelis have the legal right to settle in Judea and Samaria and the establishment of settlements cannot, in and of itself, be considered illegal," it added, referring to the West Bank.
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Netanyahu offered only cautious comment on the report.
"I have great respect for judge Levy's report and the people who worked with him. They carried out serious work over several months," he said in remarks carried on Israeli military radio.
"I will present the report to the committee I created on settlement issues. We will discuss it and we will decide."
Interior Minister Eli Yishai, who heads the ultra-Orthodox party Shas that is a member of Netanyahu's coalition, also endorsed the report.
"It is time to say that the settlements in Judea and Samaria are not against the law but go hand in hand with Zionism and Judaism," he said in a statement.
But Talia Sasson, a judge who drew up a 2004 report on outpost settlements commissioned by then-prime minister Ariel Sharon, criticised the document in comments to public radio.
"This report should not be adopted by the government because it doesn't take into account numerous judgments by the Supreme Court which is the only body that can determine the legal status of the West Bank," she said.
Sasson's report also said the government had given enormous support to the construction of outpost settlements, despite their illegal status, and it recommended dismantling the hundreds of outposts that dot the West Bank.
And legal organisations called the report "outrageous."
"Since 1967, consecutive Israeli governments held a steadfast and unequivocal position that the occupied territories are being held in belligerent occupation... and they do not constitute a part of the State of Israel," Tamar Feldman of the Association for Civil Rights in Israel said in a statement.
"There is complete agreement on this matter between Israel and the rest of the world, and rejecting this position -- through a committee appointed by the prime minister -- is outrageous."