Israeli officials announced on Friday that Binyamin Netanyahu, Israel's prime minister, intended to give the go-ahead for the new projects before considering a halt.
Netanyahu's move is widely seen as an attempt to cement the support of his coalition government, many members of which are committed to expanding Israel's borders into the West Bank.
Saeb Erekat, the Palestinian chief negotiator, said Israel's decision further undermined any belief that it is a credible partner for peace.
"Israel's decision to approve the construction of over 450 new settlement units nullifies any effect that a settlement freeze, when and if announced, will have," Erekat said in a statement on Monday.
Jacky Rowland, Al Jazeera's correspondent in Jerusalem, said Netanyahu was struggling to please two different camps - pro-settler elements inside the country and global powers outside.
"He is trying to be all things to all people and ultimately you can't please all of the people all of the time," she said.
"People, even within Israel, are not really satisfied with what Netanyahu is trying to do here.
"The opposition, led by Tzipi Livni, accused Netanyahu of trying to perform some sort of conjuring trick, trying to have a freeze and construction at the same time.
"It is going to cast something of a cloud over the coming visit by George Mitchell, the main [US] Middle East envoy, who is due to come to Israel again in a matter of days."
Mitchell is due back in the region later this week to try to finalise a deal with Netanyahu over settlements.
That meeting comes ahead of a possible meeting at the UN General assembly later in the month involving the Israeli leader, Abbas and Barack Obama, the US president.
Washington has for months pushed Israel to freeze all settlement activity and for Arab states to take steps towards normalising relations with it in order to revive Middle East peace talks suspended late last year over Israel's war in the Gaza Strip.
About 300,000 Israelis live in the West Bank and another 200,000 in Arab East Jerusalem, territory captured in a 1967 war.
About 2.5 million Palestinians live in the West Bank and aspire to establish a state there and in the Gaza Strip.