The decision retroactively approves buildings that are already standing in Itamar and further grants permits for the construction of schools, kindergartens and other public institutions.
Itamar has become a symbol for many settlers, following the massacre of the Fogel family in 2011. Immediately following the murders, many demanded the approval of an urban development plan for the settlement.
Settlers claimed that the gap in security arrangements for the settlement caused by the lack of approval for a building plan led to the massacre not being prevented.
The approval was one of the central goals of Yossi Dagan, the head of the Shomron Regional Council. Dagan established the protest tent outside Netanyahu's house after the murder of Naama and Eitam Henkin a few weeks ago.
It is understood that the approval does not allow for additional homes to be built, but rather only buildings that will serve the residential houses that are already in place.
While waiting for the approval, children in Itamar were unable to attend school in a fixed location. The Ministry of Finance only recently provided funds to the Shomron Regional Council for the building of a day care center, but because the urban development plan had not yet been approved, the building never became active.
"Small approvals such as these are a mockery and do nothing for settlements," the Yesha Council, which represents numerous municipal councils, said regarding the decision.
"We are talking about plans that include new neighborhoods and expansion of settlements, but in practice they are reduced to plans that only include what has already been built, with no approval for new housing units," the council added.
"Approvals that only deal with existing buildings are also only given after a delay and offer nothing new. This building freeze is by design and the halt in construction is the current government's biggest failure."
Dagan said: "The decision to approve an urban development plan for Itamar is ultimately just a correction to a years-long injustice to Israelis living in the settlement, who have had to deal with murderous terror attacks.
"The children in Itamar, like children in Tel Aviv, have the right to an education in kindergartens and schools in a permanent building and not just in caravans," Dagan continued.
"The approved plan only relates to existing structures and unfortunately does not give any momentum to building in the settlement," he added. "It must be emphasized that we still expect the prime minister to make a meaningful turnaround and stop the strangulation of construction in Judea and Samaria.
"We also need approval for settlements to develop according to their needs and for new buildings and new settlements," Dagan continued.
Dagan refused to confirm whether he had reached an agreement with the prime minister to fold up the tent outside the PM's house. After the tent was packed up Dagan put out a vague statement, saying that progress had been made on the issue of security but things remained stuck regarding construction.