Israel approved a major settlement project on Wednesday in an area of the occupied West Bank that the international community has warned threatens the viability of a future Palestinian state.

Israel has long had ambitions to build on the roughly 12 square kilometres (five square miles) known as E1 that lie just east of Jerusalem, but the plan had been stalled for years amid international opposition.

Critics say the settlement would undermine hopes for a contiguous Palestinian state with east Jerusalem as its capital.