An Israeli planning committee approved the next step for construction of 940 housing units in the Jerusalem settlement of Gilo, Israel Radio reported Tuesday.
The city's district planning and building committee said the project could move forward without any significant changes to the plans that had been published for public review, the radio said.
The committee is expected to give its final approval in coming months, after which the Israel Housing Ministry can issue tenders for the construction.
Israel calls Gilo an integral part of its unrecognized, self-declared capital. It is located in southern Jerusalem within the Israeli-drawn municipal boundaries, but beyond the so-called "green line" that separates Israel from the occupied West Bank.
Israel also finalized its approval to upgrade the status of a college in the settlement of Ariel, making it the first Israeli university in the West Bank.
Defence Minister Ehud Barak instructed military authorities who technically govern the West Bank to "declare the Ariel University Centre a university," the ministry late Monday.
The decision came after the attorney general found no objection to the upgrade, the statement said. The supreme court is to hear a petition against it.
The Gilo project comes on top of plans to build 1,500 apartments in Ramat Shlomo, a settlement in northern Jerusalem, 3,000 in the controversial E1 area to the east, more than 2,000 in Givat Hamatos to the south, and 3,000 elsewhere in the West Bank and East Jerusalem.
Prime Minister Benjamin Netanyahu has not denied speculation that the expedited construction is in response to what Israel has called the Palestinians' "unilateral move" at the United Nations.
The UN General Assembly voted late last month to upgrade Palestine to the status of a non-member observer state.