Britain's Foreign Secretary has called on Israel to "reconsider" its approval of more than 900 housing units in east Jerusalem.
The plans for the buildings in the residential area of Gilo, on the road to Bethlehem, were given the green light by the Jerusalem municipality on Monday. The buildings would double the number of homes approved in Gilo since November 2009.
However officials said this was "only the first step" and it could be years until construction began.
Israel disputes the claim that such building is settlement activity, but William Hague said he condemned the decision. He argued that the plans were illegal under international law and described them as "an obstacle to peace and a threat to a two state solution".
Mr Hague said: "All those who support a secure future for Israel and a future Palestinian state should be working urgently to restart peace negotiations, not taking steps which make this more difficult."