Israel has given final approval for a controversial settlement project that would effectively cut off the occupied West Bank from East Jerusalem and divide the territory in two.
Construction in the E1 area has been frozen for two decades amid fierce international opposition. Critics warn it would put an end to hopes for a viable, contiguous Palestinian state.
On Wednesday, a defence ministry committee approved plans for 3,400 homes in E1. Far-right Finance Minister Bezalel Smotrich, who unveiled them last week, said the idea of a Palestinian state was "being erased".
The Palestinian Authority condemned the move, saying it was illegal and would "destroy" the prospects for a two-state solution.
It follows declarations by a growing number of countries of their intention to recognise a Palestinian state, which Israel has denounced.
