Israel has upgraded a college in a West Bank Jewish settlement to a university, reflecting a determination to keep control of the enclave in any peace deal with the Palestinians.

The decision on Monday gives the Ariel campus, established in 1982 near the city of Nablus, the same status as universities inside Israel, in a move that could trigger international condemnation and enrage the Palestinians.

Palestinians consider the West Bank to be part of their future state. Most of the international community agrees and considers Israel's West Bank settlements illegal and an obstacle to peace.

The move comes after Israel announced plans to expand other settlements on occupied land, drawing protest from European governments and the United States.

"For the first time in decades, Israel has a new university," Prime Minister Benyamin Netanyahu's office said in a statement.

In September, Israel's Council for Higher Education, which regulates the seven universities in the Jewish state, opposed the move, branding it political and filed a petition against it to the High Court of Justice.

Final approval came from military chiefs, who formalised a cabinet decision in September. Their decision was delayed while experts examined legal challenges from other universities that opposed the upgrade.

Some Israeli university heads argued that public funding for the new university would come at their expense.

The Palestinian Higher Education Office also condemned the decision and urged universities worldwide to boycott the
institution.

European nations and Washington have criticised Netanyahu's plans to build as many as 6,000 more settlement homes, announced since a November 29 United Nations vote gave Palestinians effective recognition as a state and angered Israel.

European governments have summoned Israeli ambassadors to protest at the expansion of settlements, particularly those established on captured land that Israel annexed to Jerusalem in a move that was never recognised internationally.

Israel has signalled it intends to retain control of several larger settlement blocs such as Ariel under any future pact,
while the fates of other enclaves may be negotiated.