According to a report published by the Israeli daily Haaretz on Thursday, various ministries have also turned a blind eye to scores of new unauthorised colonies.
The study, commissioned by Prime Minister Ariel Sharon, found that government ministries handed over millions of dollars to help finance their infrastructure.
The education ministry paid for nurseries and their teachers, the energy ministry connected outposts to the electricity grid while the government also shelled out for the construction of roads, the report said.
It also detailed how senior army officers "reached quiet understandings" to allow the outposts to be established and how occupation soldiers still guard them.
The report's author, former justice ministry official Talia Sasson, wrote that vague definitions of the boundaries of authorised settlements were exploited by the architects of the outposts.
Construction on some outposts
has continued unabated
Observers have estimated that nearly 100 of the illegal outposts are still in place despite repeated assurances by Israel to its US allies that they would all be removed in line with the terms of the troubled road map for peace blueprint.
The outposts are generally set up as makeshift settlements with caravans but are often later "legalised" by the authorities.
All Jewish settlements in the occupied territories are considered by many in the international community to be illegal.