The Israeli government has approved the building of 3,000 homes for Jewish settlers in the occupied West Bank and East Jerusalem.
The move comes less than a day after a vote at the UN General Assembly granted Palestine non-member observer status.
"It is an act of Israeli aggression against a state, and the world needs to take up its responsibilities," a senior Palestinian official told AFP.
The US also criticised the decision to expand settlements in the occupied territory.
"We reiterate our longstanding opposition to settlements and East Jerusalem construction and announcements," White House spokesman Tommy Vietor said.
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