The Israeli government has announced the "immediate construction" of some 300 new units at Beit El in the occupied West Bank as two illegally constructed buildings were demolished in the same area after a court order.
"After consultations in the prime minister's office, the immediate construction of 300 homes in Beit El has been authorised," Netanyahu's office said on Wednesday, adding that planning for another 504 homes in annexed East Jerusalem had also been approved.
According to the statement, the 300 units had been promised three years ago following the demolition of other homes in the Beit El settlement.
Earlier, settlers clashed with Israeli police as bulldozers demolished the two structures built on private Palestinian land.
The court's role is to judge; the government's role is to build.
A senior Palestine Liberation Organisation official denounced the plans to build new homes as "war crimes" and accused Israel of sabotaging peace efforts.
The United Nations, European Union, and the United States condemned Wednesday's announcement.
UN chief Ban Ki-moon said "settlements are illegal under international law, an impediment to peace and cannot be reconciled" with Israel's "stated intention to pursue a two-state solution", his spokesman said in a statement released in New York.
A spokesman for the EU also said the decision called into question Israel's "stated commitment to a negotiated two-state solution in the Middle East peace process".
US state department deputy spokesperson Mark Toner said "settlement expansion threatens the two-state solution and calls into question Israel's commitment to a negotiated resolution to the conflict".
"The United States continues to view settlements as illegitimate... We continue to urge the Israeli government to refrain from unhelpful actions that undercut the possibility of a two-state solution," he said in a statement.
Settlers clash with police
The latest approval came after the Israeli High Court upheld a demolition order for the two structures.
The complex was deemed illegal because it was under construction without prior Israeli authorisation.
Al Jazeera's Stefanie Dekker reporting from Beit El said the two building housed 24 apartments that had no residents.
"They [buildings] were not ready. They were empty but it is usually symbolic for the settlers here. We had a standoff with police early in the day and that got quiet violent but now things are relatively quiet," Dekker said.
The military moved in and removed protesters holed up inside, but hundreds of Jewish settlers gathered at the scene and some fought with Israeli forces, who responded by firing water cannons at the protesters.
The new units announced by Benjamin Netanyahu's office are both in Beit El and elsewhere, including areas in east Jerusalem, which Israeli leaders say are inseparable neighbourhoods of Jerusalem.
The Israeli government says these neighbourhoods will remain a part of Israel under any future peace agreement, but the Palestinians consider them settlements and say construction there is illegal, a position backed by the international community.
Israel captured the West Bank and East Jerusalem in 1967, and annexed East Jerusalem in a move that is not recognised internationally.
Israeli Education Minister Naftali Bennett, head of a pro-settler party, welcomed the announcement of the new units even as he criticised the top court's decision.
"The court's role is to judge; the government's role is to build," he said in a written statement. "We will build up the land of Israel, but in a legal and appropriate way."
Source: Al Jazeera and agencies