A similar announcement is expected to be made in Washington by US special envoy to the Middle East George Mitchell.
Prime Minister Benjamin Netanyahu called the freeze "not a simple step, not an easy one, which has much more advantages than disadvantages."
"Under the international circumstances that have been created, this move advances the broader national interests of Israel," said Netanyahu. "It allows us to present the world with a simple truth: the Israeli government wants to enter negotiations with the Palestinians, is taking practical steps in order to do so, and is very serious in its intentions of promoting peace."
The new decision is expected to be enforced according to an outline reported by Ynet earlier Wednesday, following a meeting convened by the coordinator of the government's activities in the territories.
Science Minister Daniel Hershkowitz, who is also the chairman of the Habayit Hayehudi faction, voiced his firm opposition to the prime minister's and the defense minister's proposal. The minister demanded that every such decision be conditioned on a cabinet decision.
"A rightist government must not choke the settlements, but help them," said Minister Hershkowitz.
Yesha Council Chairman Danny Dayan said in response to the freeze proposal that "the Netanyahu cabinet was elected for its promise to develop the settlement of Judea and Samaria."
"Immediately after being established, the government constricted the settlements' steps. Now, it is passing into the stage of chasing and taking out the settlements," said Dayan. "The government ministers are responsible for blocking this."
The matters discussed in the meeting included the need to sign orders, issuing a construction prohibition map in accordance with a general's order, defining communities' borders, imposing sanctions on heads of communities and councils, arresting and banning youth involved in building exceptions, framing caravan operators in the West Bank and closing them with the help of the Shin Bet and police, defining illegal construction as a criminal activity, quick demolition of any new construction, etc.
It was also decided to focus on the Amana settlement movement and to appoint an inter-ministerial team to implement its conclusions.
Sources close to the prime minister clarified that the expected decision, which was coordinated and agreed upon a long time ago, had nothing to do with the impending prisoner exchange deal with Hamas.
Palestinian officials rejected the expected Israeli offer to partially freeze West Bank settlement construction, even before it was made public.
Palestinian negotiator Saeb Erekat said Tuesday that any freeze that did not include east Jerusalem was unacceptable. The Palestinians have refused to reopen peace talks with Israel until it halts all settlement construction.
Efrat Weiss and The Associated Press contributed to this report