Prime Minister Benjamin Netanyahu's security cabinet has approved Israel's first new settlement in two decades to compensate for the demolition of a settler outpost.
Mr Netanyahu said the decision to replace Amona was passed unanimously, honouring a promise he made after it was destroyed earlier this year following a court order.
He said the new settlement will be built near Shiloh, close to the Palestinian city of Ramallah in the West Bank.
For the past two decades, the international community has backed a two-state solution to the conflict where a Palestinian state would be established alongside Israel in territory it captured in the 1967 war.
The international community mostly views settlements in that territory as illegal and an obstacle to peace.
Israel says settlements along with other issues like security should be resolved in peace talks.