The Palestinian Authority said it would pursue Security Council action over the step.
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3,000 homes beyond Green Line okayed
The Jerusalem regional planning and construction committee has given the plan its approval on Monday after hearing public objections. The committee had instructed the applicants to trim their request to build 1,600 units at the Ramat Shlomo neighborhood to 1,500 and ensure the preservation of a local archeological site before resubmitting the plan for a final green light.
The plan was suspended after causing a diplomatic rift with Washington when it was first announced in 2010 during US Vice President Joe Biden's visit to Israel. The state announced its revival two weeks ago.
The Palestinian Authority responded by saying it would seek a UN Security Council meeting on the Israeli plans to build the homes.
The PA is about to take "important and necessary measures against Israel's settlement building, including recourse to the UN Security Council, to prevent implementation of these decisions," President Mahmud Abbas's spokesman Nabil Abu Rudeina told AFP.
Addressing the Israeli decision, State Department spokeswoman Victoria Nuland said that the Obama administration's position regarding settlement building has not changed.
Nuland reiterated the US' opposition to unilateral actions by either Israel or the Palestinians, noting that once a final agreement is in place the settlement issue will be put to rest.
'Netanyahu's policies are erratic'
Meretz Chairwoman Zehava Gal-On added that the Israel will have to pay a heavy price for the decision when it comes to the global community's response. "We oppose any settlement construction that is meant to prevent a future agreement" with the Palestinians, she said.
Yair Lapid's Yesh Atid Party said that Netanyahu is "stressed" and is driven by political considerations ahead of the national elections, a behavior that results in "outdated, irresponsible and erratic policies that harms Israel's delicate relations with the US and the world time and time again."
Monday's announcement is expected to add international discontent caused by a separate plan to build 3,000 more settler homes in the West Bank and east Jerusalem after the Palestinians won upgraded status at the United Nations last month.
Some of that construction is to take place in a corridor of land east of Jerusalem called E1, which critics say could threaten the territorial contiguity and viability of a future Palestinian state.
Last week, Abbas warned that the Palestinians could pursue Israel at the International Criminal Court if it builds the new settler homes in the highly sensitive E1 area.
The Palestinians' newfound UN status could potentially give them access to the ICC, sparking fears they could sue Israel for war crimes – particularly over its settlement building.
AFP contributed to the report
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