The Jerusalem municipality said Wednesday it plans to approve 800 new homes in Jewish-populated areas of east Jerusalem in the coming month.
The housing would be the first approved in east Jerusalem since President Donald Trump called on Israeli Prime Minister Benjamin Netanyahu to curb settlement construction in February.
The announcement could complicate Trump's attempts to restart peace talks.
Trump's son-in-law and adviser Jared Kushner arrived in Israel last month and sat down with Israeli and Palestinian leaders in an effort to help kick-start long-dormant negotiations. Kushner discussed potential actions to make progress toward "a genuine and lasting peace" between Israelis and Palestinians during his meeting with Netanyahu.
City hall said it will approve the 800 units in an upcoming planning committee meeting, along with 114 units in Arab neighborhoods.
Jerusalem Mayor Nir Barkat said in a statement that construction in Jerusalem is "essential, important and will continue full force."
Israel captured east Jerusalem during the 1967 Mideast war and annexed it, but the international community doesn't recognize Israeli sovereignty. Palestinians hope to establish their capital of a future state in east Jerusalem.