Israel's far-right Finance Minister Bezalel Smotrich said Wednesday he has approved the construction of 3,401 housing units for settlers in a particularly controversial area of the occupied West Bank.

The homes would be built in the E1 area, a stretch of land east of Jerusalem between the city and the settlement of Ma'ale Adumim. Construction there is seen as especially contentious because it would effectively cut off East Jerusalem from the northern West Bank. Building plans in E1 have been frozen for years, largely due to international opposition.

Smotrich, leader of a pro-settler party in Prime Minister Benjamin Netanyahu's ruling coalition, said the move was also aimed at preventing the establishment of a Palestinian state.

"Approval of construction plans in E1 buries the idea of a Palestinian state and continues the many steps we are taking on the ground as part of the de facto sovereignty plan that we began implementing with the establishment of the government," he said in a statement.

Peace Now, an Israeli settlement watchdog, said in a statement that the Israeli Housing Ministry approved on Wednesday six new tenders for a total of 4,030 housing units in the West Bank. "Netanyahu's government is using every minute to deepen the annexation of the West Bank and block the possibility of a two-state peace," the group said.

The settlements are located in the West Bank and East Jerusalem, territories captured by Israel in the 1967 Middle East war. More than 720,000 Israeli settlers live in heavily guarded communities there, among a Palestinian population of more than 3.3 million.

The settlements are considered illegal under international law, including an advisory opinion by the International Court of Justice on July 19, 2024, which found Israel's occupation of the West Bank, East Jerusalem and the Gaza Strip unlawful and called for Israel to end its occupation "as rapidly as possible" and to provide reparations for the harm caused.