The Palestinian Foreign Ministry on Sunday condemned an Israeli plan to build 20,000 new settlement homes in a major settlement east of Jerusalem.
"The settlement project aims at separating East Jerusalem from its surroundings," the ministry said in a statement.
It said the settlement building "shuts the door to any plan to achieve peace on the basis of the two-state solution and thwarts any efforts to launch a real peace process".
Earlier on Sunday, Israeli daily Yisrael Hayom (Israel Today) reported that the Ministry of Construction and Housing and the municipality of Ma'aleh Adumim signed an agreement to build some 20,000 housing units in the settlement.
The project will be implemented once it is approved by the Israeli government, the newspaper said.
Settlement construction has been a major obstacle to the already stalled peace process between Palestinians and Israelis.
According to Palestinian figures, more than 700,000 Jewish settlers now live on 196 settlements (built with Israeli government approval) and more than 200 settler outposts (built without its approval, but usually protected by Israeli forces) across the occupied West Bank.
International law views the West Bank and East Jerusalem as "occupied territories" and considers all Jewish settlement-building activity on the land to be illegal.