Interior Minister Eli Yishai approved a plan to 1,100 new homes in Jerusalem's Gilo area on Tuesday.
"The Israeli interior ministry announced on Tuesday that the plan for 1,100 new housing units in Gilo had passed its district planning committee, and will now be available for public objections for 60 days," a ministry statement said.
According to the plan, 20 percent of the units in Jerusalem's southern neighborhood would be allotted for young couples, in compliance with a directive by Interior Minister Eli Yishai.
The plan, which will be subject to 60 days of public debate before final approval from Jerusalem municipal authorities, also includes the construction of a boardwalk, public structures, and a commercial center.
Prime Minister Binyamin Netanyahu said Tuesday he had no intention of interfering with the project, or acquiscing to demans for a renewed building freeze, saying "we gave at the office."
The move comes amid Palestinian Authority chairman Mahmoud Abbas' unilateral statehood gambit at the United Nations and is seen by some observers as a signal to officials in Ramallah that the only course to statehood is direct talks without preconditions.
Abbas has systemically used preconditions; including insistence on further Israeli construction freezes in 'disputed territories,' as a means forestall moribund peace-talks while accusing Israel of being at fault.
The UN Security Council is expected to debate Abbas' application for membership in the United Nations, but with Abbas struggling to gain the necessary 9 votes in the 15-member decision making body and a promised negative recommendation from the US – a permanent member whose approval is required – the initiative is increasingly seen as moot.