Israel plans to build 50 new West Bank homes in an existing settlement to absorb residents evicted from the illegal outpost of Migron, five kilometres north of Jerusalem.
The State Prosecutor's Office in Israel told the High Court on Friday that 190 housing units will be built in the settlement of Adam, approved by the Defence Ministry in May.
However, only 50 of the units can be erected without further approval from the ministry and the building approval does not include permission for any public buildings and roads.
News of the plan emerged shortly before Defense Minister Ehud Barak set off for the US on Monday for talks with President Barack Obama over Israel's refusal to completely halt West Bank settlement construction.
A spokesperson for Mr Barak denied rumours of a plan to eventually build 1,450 new homes.
"The Defense Ministry approved the construction of 50 housing units only in the community of Adam, which will serve the evacuees from the settlement of Migron," the statement said.
"All other reports speaking of the construction of 1,450 housing units are erroneous, tendentious and incorrect."