Israel has developed plans to build 9,000 settler homes in annexed east Jerusalem, the first such project in the city in more than 20 years, watchdog Peace Now said on Tuesday.
Details of the plan emerged a day after Israel's transport ministry approved a controversial proposal to extend a train line from Tel Aviv into Jerusalem's flashpoint Old City.
Peace Now said the housing ministry had a week ago submitted plans to Jerusalem's Municipality to build the settlement units on the site of the former Atarot airport, between two Palestinian neighbourhoods.
It said final approval of the project could take years.
But if built, it would drive "a wedge in the heart of the Palestinian urban continuity between Ramallah and East Jerusalem, thus preventing the establishment of a viable Palestinian state with its capital in East Jerusalem."
It would be the first new settlement in east Jerusalem since a previous government of Prime Minister Benjamin Netanyahu built the Har Homa settlement near Bethlehem in 1997, Peace Now said.
More than 600,000 Jewish settlers live in the occupied West Bank and annexed east Jerusalem, in communities considered illegal under international law.
Peace now said the Atarot plan "also includes the demolition of dozens of Palestinian residential units that were built in the area without permits throughout the years."
Palestinians regularly build without the required permissions because they are unable to obtain them from Israeli authorities.
Jordan, the custodian of Muslim holy sites in Jerusalem, blasted the proposed rail extension as "a flagrant violation of international law".
A Middle East peace plan unveiled last month by US President Donald Trump gave a green light for Israel to declare sovereignty over all of Jerusalem as well as settlements and other territory in the West Bank.
The Trump proposal has been rejected by the Palestinians, who demand east Jerusalem as the capital of their state.