"The Civil Administration has given the green light for 296 housing units at Beit El," said the spokesman for a defense ministry unit which administers the occupied lands.
The Thursday announcement comes as recent atrocities of the regime against Palestinians have raised tensions between the two sides.
Israeli forces have carried out several attacks on Palestinians during the past weeks, which sparked a wave of anger in the Arab world.
Israel continues its controversial settlement activities that have already faced numerous UN Security Council resolutions describing them as illegal.
Chief Palestinian negotiator Saeb Erakat condemned regime’s decision for new settlements and said the move sent a clear message to the world that Israel was not interested in resuming the so-called peace talks, frozen in 2010.
This is a blow to the peace process, he said, adding that it would drag the region towards violence rather than peace.
Direct talks in September 2010 collapsed shortly after they were launched because of an intractable dispute over Israel's settlement building, which is a violation of international law.
The Palestinians say they will not return to negotiations unless Israel freezes its illegal construction on their lands.
More than half a million Israelis live in over 120 illegal settlements built since the 1967 Israeli occupation of the Palestinian territories of the West Bank and East al-Quds (Jerusalem).
Construction of Israeli settlements on occupied Palestinian lands violates the Fourth Geneva Convention, which prevents an occupying power from transferring its own population into occupied territory, an act that could be equal to war crimes that fall under the jurisdiction of the International Criminal Court.