Israeli officials on Wednesday recommended about 3,500 new settler homes be built in East Jerusalem, a project repeatedly denounced by the UN, Palestinians and rights groups.
The local planning and housing committee of the city of Jerusalem, consisting of elected municipal officials, backed the construction of the units, officials and NGOs said.
A total of 2,092 such homes are planned near Mount Scopus and 1,465 between the sectors of Givat Hamatos and Har Homa, they said.
These areas are along the "green line" that theoretically separates annexed East Jerusalem, which Palestinians regard as the capital of their own future state.
A limited number of planned units are on the western side, the Israeli side of the city.
Israel captured East Jerusalem, which includes the Old City, in 1967 and annexed it in a move not recognised by most of the international community.
It claims the whole of Jerusalem as its indivisible capital.
The projects will now proceed to consideration by Jerusalem's regional planning committee, which has the authority to approve them, on January 17.
"The plans add to the tension on the ground and highlight the blatant discrimination that the government is building in East Jerusalem for Israelis only, while the hundreds of thousands of Palestinians in the city can build almost nothing," anti-settlement group Peace Now said.
Activists and charities fear that building the settler homes between Givat Hamatos and Har Homa could block links between Palestinian districts in East Jerusalem and the neighbouring Palestinian town of Bethlehem.
About 200,000 Israelis live in East Jerusalem, alongside 300,000 Palestinians.
Excluding East Jerusalem, about 475,000 Israelis live in settlements in the occupied West Bank that are regarded as illegal under international law, alongside more than 2.8 million Palestinians.
The UN, NGOs and the Palestinian Authority have expressed concerns that the projects will also cut the link between the West Bank and areas of East Jerusalem populated by Palestinians, further undermining any prospect of a Palestinian state.