Israeli authorities have invited tenders for the construction of 77 buildings in settlement neighbourhoods of occupied East Jerusalem.
Peace Now spokeswoman Hagit Ofran told AFP news agency on Monday that it was the first such announcement in the occupied East Jerusalem since a March 17 general election win by Prime Minister Benjamin Netanyahu's right wing Likud party.
The watchdog said 36 of them were being offered in Neve Yaakov and another 41 in neighbouring Pisgat Zeev. Both are located at the northern edge of East Jerusalem.
Peace Now said the tenders could be seen as a sign of the future inclinations of the rightwing religious coalition government that Netanyahu is currently putting together.
"Publication of these tenders in east Jerusalem is liable to be an indicator from Netanyahu's transitional government of what can perhaps be expected - God forbid -- when the new government is formed," it said.
"Instead of changing direction and showing that Israel is ready for peace, Netanyahu is sticking to the line he held during his election campaign and seeking to prevent the chance of peace."
The day before the election, Netanyahu vowed that if reelected he would build thousands of settler homes in Arab East Jerusalem to prevent future concessions to the Palestinians.
Israel seized East Jerusalem in the Six-Day War of 1967 and later occupied it in a move never recognised by the international community.
Israel refers to both halves of the city as its "united, undivided capital" and does not see construction in the eastern sector as settlement building.
The Palestinians want the eastern sector of the city as the capital of their future state, but successive Israeli leaders have vowed that Jerusalem will never again be divided.