The United States State Department condemned Israel for its decision to expand the boundary of an existing West Bank settlement bloc.
The State Department Spokesman John Kirby said on Friday that the decision "undermines the possibility of two state solution."
Israeli Defence Ministry added a compound in the West Bank to the jurisdiction of the Gush Etzion regional council. The compound is located south of a junction in the West Bank which has witnessed heavy fighting between Israelis and Palestinians.
The Palestinians are seeking statehood for the Israeli-occupied West Bank and the blockaded Gaza Strip, with East Jerusalem as the proposed capital. They consider all Israeli construction in the West Bank to be illegal, a stance that is backed by the international community, which sees settlement building as undermining international efforts to reach a two-state solution.
The continued construction of illegal Jewish settlements in the West Bank and East Jerusalem - which both came under Israeli occupation following the Six-Day war in 1967 - often raises tensions between Israelis and Palestinians, and last year resulted in the breaking-off of peace talks between the Israeli government and the Palestinian Authority.
Israel walked out of talks after the Palestinian Authority announced the formation of a joint government with Palestinian resistance group Hamas, which has ruled the Gaza Strip since 2007. Hamas is deemed by Israel to be a “terrorist” organisation.
The collapse of talks led to a brief war between Israel and Hamas in the summer of 2014, which killed over 2,200 Palestinians - mostly civilians. Seventy two Israelis, mostly soldiers, were also killed.