Defense Minister Naftali Bennett said on Sunday that he is planning the construction of a new Jewish neighborhood in the West Bank city of Hebron.
Bennet instructed the military to begin the official process by advising the Palestinian municipality of the plan to construct housing for Jewish settlers in what had been the produce market which was closed in 1994.
According to the proposed plan, the now-empty shops on the street level will remain in Palestinian hands while housing units will be built on the top floors to house settlers.
The disputed territory was home for both Jews and Arabs before Arab riots broke out in 1929, in which dozens of local Jews were killed.
The riots of August 1929 began when a long-running dispute over access to Jerusalem holy sites escalated into violence. Members of the local Arab community launched savage attacks on Jewish neighbors and their institutions, killing at least 67 Jews.
The Jews of Hebron left the city in the wake of the riots. The land fell first into the hands of local Arabs and later came under Jordanian rule, during which time the market was built on the area.
The land was never returned to the Jewish community and settlers have been trying to reclaim it since Israel captured Hebron during the 1967 Six-Day War. Today some 800 settlers live in Hebron, alongside around 250,000 Palestinians.
The market has been abandoned for the past 25 years since the IDF closed the compound due to security considerations in 1994. A new market was established in a different location in the city.
The disputed market area has long been a no man's land, serving as a barrier between the Jewish settlers and Hebron's Muslim population.
Hamas and Palestinian Liberty Organization (PLO) both criticized Bennett's new plan, blaming the Trump administration's decision to no longer consider Israeli settlements on the West Bank illegal.
"This is the result of the U.S. government's attempt to legitimize the settlements, the next decision in this spirit will be annexation," said PLO Secretary General Saeb Erekat
Hamas has also released a similar statement saying that Bennett's initiative "is the result of the American support, expressed by Secretary of State Mike Pompeo."