Israel has authorised the construction of 3,000 more housing units in occupied East Jerusalem and the West Bank, according to Israeli officials.
It is also speeding up the processing of 1,000 planning permissions.
The Palestinian Authority has said it will not return to peace talks without a freeze in settlement building.
The decision comes a day after a vote at the UN General Assembly upgraded the Palestinians' status at the UN to that of non-member observer state.
According to the Israeli Haaretz newspaper, some of the new units will be between Jerusalem and the settlement of Maale Adumim.
Plans to build settlements in the area, known as E1, are strongly opposed by Palestinians, who say the development will cut the West Bank in two, preventing the creation of a contiguous Palestinian state.
The move is a first indication of Israeli anger, less than 24 hours after the vote on Palestinian status was held at the UN, the BBC's Kevin Connolly in Jerusalem reports.
The Palestinians may well have been expecting this - or something like it - but it is a reminder that the gulf between the two on the settlement issue remains huge, our correspondent adds.
Earlier this month, a paper by the Israeli foreign ministry described the Palestinians' pushing for the vote as "crossing a red line that will require the harshest Israeli response".
About 500,000 Jews live in more than 100 settlements built since the occupation of the West Bank and East Jerusalem. The settlements are considered illegal under international law, though Israel disputes this.
It is also speeding up the processing of 1,000 planning permissions.
The Palestinian Authority has said it will not return to peace talks without a freeze in settlement building.
The decision comes a day after a vote at the UN General Assembly upgraded the Palestinians' status at the UN to that of non-member observer state.
According to the Israeli Haaretz newspaper, some of the new units will be between Jerusalem and the settlement of Maale Adumim.
Plans to build settlements in the area, known as E1, are strongly opposed by Palestinians, who say the development will cut the West Bank in two, preventing the creation of a contiguous Palestinian state.
The move is a first indication of Israeli anger, less than 24 hours after the vote on Palestinian status was held at the UN, the BBC's Kevin Connolly in Jerusalem reports.
The Palestinians may well have been expecting this - or something like it - but it is a reminder that the gulf between the two on the settlement issue remains huge, our correspondent adds.
Earlier this month, a paper by the Israeli foreign ministry described the Palestinians' pushing for the vote as "crossing a red line that will require the harshest Israeli response".
About 500,000 Jews live in more than 100 settlements built since the occupation of the West Bank and East Jerusalem. The settlements are considered illegal under international law, though Israel disputes this.

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