181 new settlement units have been approved by Israel in occupied East Jerusalem, a Palestinian expert on Israeli settlement-building activity said.
The settlements have no legal validity according to a resolution passed by the United Nations Security Council.
The move comes a few months after the Israeli government allocated almost $13 billion in financing other West Bank settlements in Kiryat Abra and Hebron.
"Established in 1971, the Gilo settlement currently contains more than 10,000 housing units and is home to some 40,000 Jewish settlers," Khalil Tukafji told Anadolu Agency.
Tukafji added that more illegal settlements may be constructed in the Gilo settlement before the end of the year.
Although only 181 settlements were approved, the Jerusalem Post reported that talks in September concerned the construction of 770 settlements in Gilo, an area beyond the Green line that has been deemed illegal by the EU.
The US State Department condemned the move, saying that it "risks entrenching a one-state reality" and that the move threw into question Israel's aim towards peace with the Palestinians, i24 news said.
The Turkish foreign ministry also condemned the decision, calling it unacceptable and that the actions "violate the most basic rights of the Palestinian people and destroy the prospects for peace."
Israel occupied the West Bank, including East Jerusalem, during the 1967 Middle East War.
It later annexed the city in 1980, claiming it as the capital of the Jewish state in a move never recognised by the international community.
International law views the West Bank and East Jerusalem as "occupied territories" and considers all Jewish settlement-building activity on the land as illegal.