The Israeli Construction and Housing Ministry announced a tender to build over 1,000 housing units beyond the 1967 borders, the Jerusalem Post said.
Plans to build 1,028 housing units in east Jerusalem and two West Bank settlements beyond the 1967 borders are a part of a greater scheme to create about 6,000 Jewish homes.
The ministry said it was marketing land for 500 homes in Har Homa, sandwiched between east Jerusalem Arab neighborhoods and Bethlehem.
A total of 348 homes will be built in Betar Illit and 180 in Givat Zeev, both in the occupied West Bank near Jerusalem. The settlements are located 400 meters and 4.9 km over the pre-1967 line, respectively.
The construction is scheduled to begin within a year.
Israel said it would boost its settlement construction in the occupied territories the day after Palestinians won recognition from the United Nations Educational, Scientific and cultural Organization (UNESCO).
AFP quoted ministry spokesman Ariel Rosenberg as saying that the new settlement units were being marketed "as a follow-up to the Palestinian (UN membership) bid in September."
Palestinian Presidential spokesman Nabil Abu Rudeineh denounced the move, saying that 'the Israeli decision contradicts with efforts to revive the peace process,' Palestinian WAFA news agency reported.
The spokesman also said the announcement coincides with rise in Israeli settler attacks against Palestinians, their property and holy places.
The Palestinians are seeking to create an independent state on the territories of West Bank, East Jerusalem, partially occupied by Israel, and the Hamas-controlled Gaza Strip and want Israel to pull from the Palestinian territories occupied after the 1967 war.
Israel, however, has refused to return to the 1967 borders and is unwilling to raise the issue of Jerusalem, which it says is the indivisible capital of the Jewish state.
The Israeli settlement construction in the occupied Palestinian territories is the main obstacle for the resumption of the Israeli-Palestinian peace process, which has been stalled for more than a year.