JERUSALEM-Israel announced Sunday it will expropriate 400 hectares (988 acres) of Palestinian land in the occupied West Bank, angering the Palestinians and alarming Israeli peace campaigners.
The move to seize the land, in the Bethlehem area in the south of the territory, is the biggest of its kind in three decades, Peace Now said.
Meanwhile, Israel's cabinet convened on Sunday to debate Prime Minister Benjamin Netanyahu's call for swingeing budget cuts to pay for the 50 day military campaign in Gaza.
Netanyahu, Defence Minister Moshe Yaalon and Finance Minister Yair Lapid are seeking cuts of two percent from every government ministry - other than defence - to raise about 2 billion shekels ($561 million, 425 million euros).
According to documents released by the cabinet office ahead of Sunday's weekly meeting the biggest proposed cut is to the education ministry, which is being asked to give up 4.8 billion shekels.
"On the instructions of the political echelon... 4,000 dunams at Gevaot (settlement) is declared as state land," said the army department charged with administering civil affairs in occupied territory, laying down a 45-day period for any appeal.
It said the move stemmed from political decisions taken after the June killing of three Israeli teenagers snatched from a roadside in the same area, known to Israelis as the Gush Etzion settlement bloc.
Israel has named three Palestinians from the southern West Bank city of Hebron as being behind the murders.
The Etzion settlements council welcomed Sunday's announcement and said it was the prelude to the expansion of the current Gevaot settlement. It "paves the way for the new city of Gevaot", it said in a statement.
"The goal of the murderers of those three youths was to sow fear among us, to disrupt our daily lives and to call into doubt our right to the land," it said. "Our response is to strengthen settlement."
The existing settlement of Gevaot consists of only 10 families. Haaretz newspaper said construction at the site had been on the agenda since 2000 and last year the government invited bids for the building of 1,000 new homes there.
In an angry reaction to the announcement, chief Palestinian negotiator Saeb Erakat called for diplomatic action against Israel. "The Israeli government is committing various crimes against the Palestinian people and their occupied land," he told AFP.
"The international community should hold Israel accountable as soon as possible for its crimes and raids against our people in Gaza and the ongoing Israeli settlement activity in the West Bank and east Jerusalem."
Prime Minister Benjamin Netanyahu's policy of constant settlement expansion on land the Palestinians claim for a future state is deemed illegal by the European Union and an "obstacle to peace" by the United States and staunchly opposed by both.
However, Israel announced no new development during its 50-day military offensive in the Gaza Strip when it was focused on combatting cross-border rocket fire and growing disquiet in the international community over the high death toll of Palestinian civilians.
"Today's announcement clearly represents Israel's deliberate intent to wipe out any Palestinian presence on the land and to wilfully impose a de facto one-state solution," senior Palestine Liberation official Hanan Ashrawi said.
Some 550,000 Israelis live among 2.4 million Palestinians in the West Bank and occupied east Jerusalem, territory that the Jewish state captured in the 1967 Six-Day War.
"As far as we know, this declaration is unprecedented in its scope since the 1980s and can dramatically change the reality in the Gush Etzion and the Bethlehem areas," Peace Now said.
"Peace Now views this declaration as proof that Prime Minister Netanyahu does not aspire for a new 'Diplomatic Horizon', but rather he continues to put obstacles to the two-state vision and promote a one-state solution.
"By declaring another 4,000 dunams as state land, the Israeli government stabs (Palestinian president Mahmud Abbas) and the moderate Palestinian forces in the back, proving again that violence delivers Israeli concessions while non-violence results in settlement expansion," it said.
Peace Now official Hagit Ofran told AFP that the legal basis for such land confiscation goes back to an 1858 ruling by the region's Ottoman rulers.
"We are afraid that Netanyahu will carry out a lot of expansion because of the pressure he fells from his right wing and the feeling that the (Gaza) war did not end up with many successes," he said.