The US rebuked Israel Sunday overnight after it announced a land appropriation in the West Bank, calling the move "counterproductive" to efforts to achieve a two-state solution between Israel and the Palestinians, and urging Jerusalem to reverse the decision.
Some 400 hectares (988 acres) in the Gush Etzion settlement bloc near Bethlehem were declared "state land, on the instructions of the political echelon" by the military-run Civil Administration on Sunday.
The notice published on Sunday by the Israeli military gave no reason for the land appropriation decision, while Israeli media reported the move was in response to the kidnapping and murder of the three Israeli teens. Tensions stoked by the kidnapping quickly spread to Israel's border with Gaza, which is controlled by Hamas, and the two sides engaged in a seven-week war that ended on Tuesday with an Egyptian-brokered ceasefire.
Peace Now, which opposes Israeli settlement activities in the West Bank, territory the Palestinians seek for a state, said the appropriation was meant to turn a site where 10 families now live adjacent to a Jewish seminary into a permanent settlement.
Construction of a major settlement at the location, known as "Gva'ot", has been mooted by Israel since 2000. Last year, the government invited bids for the building of 1,000 housing units at the site.
Peace Now said the land seizure was the largest announced by Israel in the West Bank since the 1980s and that anyone with ownership claims had 45 days to appeal. A local Palestinian mayor said Palestinians owned the tracts and harvested olive trees on them.
Israel has come under intense international criticism over its settlement activities, which most countries regard as illegal under international law and a major obstacle to the creation of a viable Palestinian state in any future peace deal.
The PLO condemned on the Israeli decision, saying in an issued statement that "today's decision clearly represents Israel's desire to wipe out the Palestinian presence and impose a one-state solution."
Nabil Abu Rdainah, a spokesman for Western-backed Palestinian President Mahmoud Abbas, called on Israel to cancel the appropriation. "This decision will lead to more instability. This will only inflame the situation after the war in Gaza," Abu Rdainah said.
US-brokered peace talks broke off in April after Abbas reached a reconciliation deal with Hamas, the Islamist terrorist organization that dominates the Gaza Strip, and Israel announced it would not negotiate with a government backed by Hamas.
In a series of remarks after an open-ended ceasefire halted the Gaza war, Netanyahu repeated his position that Abbas would have to sever his alliance with Hamas for a peace process with Israel to resume.
The administration of President Barack Obama, who has been at odds with Netanyahu over settlements since taking office in 2009, pushed back against the land decision. It was the latest point of contention between Washington and its top Middle East ally Israel, which also differ over Iran nuclear talks.
"We have long made clear our opposition to continued settlement activity," said a State Department official, who declined to be identified.
"This announcement, like every other settlement announcement Israel makes, planning step they approve and construction tender they issue, is counterproductive to Israel's stated goal of a negotiated two-state solution with the Palestinians," the official said.
After the collapse of the last round of US-brokered peace talks, US officials cited settlement construction as one of the main reasons for the breakdown, while also faulting the Palestinians for signing a series of international treaties and conventions.
Israel has said construction at Gva'ot would not constitute the establishment of a new settlement because the site is officially designated a neighborhood of an existing one, Alon Shvut, several km (miles) down the road.
Some 500,000 Israelis live among 2.4 million Palestinians in the West Bank and East Jerusalem, territory that the Jewish state captured in the 1967 Six Day War.
Elior Levy contributed to this report.