The announcement approving the settlement comes despite an international outcry over Israeli Prime Minister Netanyahu's promise to annex the West Bank's Jordan Valley.
Israeli Prime Minister Benjamin Netanyahu's government approved a new settlement in the occupied West Bank on Sunday, his office said, just two days ahead of closely fought general elections.
Netanyahu's cabinet agreed to turn the wildcat settlement of Mevoot Yericho in the Jordan Valley into an official settlement, the premier's office said.
All settlements are viewed as illegal under international law, but Israel distinguishes between those it has approved and those it has not.
Sunday's approval follows Netanyahu's pledge last week to annex the Jordan Valley, which amounts to one-third of the West Bank, if he wins Tuesday's elections.
"The government passed the PM's motion to build Mevoot Yericho," a statement from Netanyahu's office said as the weekly cabinet meeting was convened ceremoniously in the Jordan Valley.
Netanyahu has also said he intends to annex settlements in the wider West Bank, but in coordination with US President Donald Trump, whose long-awaited peace plan is expected to be released after the election.
The prime minister's annexation plans could effectively destroy any remaining hopes for a two-state solution to the Israeli-Palestinian conflict.
The Palestinians, the European Union and the United Nations condemned Netanyahu's Jordan Valley announcement last week.
Netanyahu said the Jordan Valley annexation would not include Palestinian cities such as Jericho, but it would effectively be encircled by Israeli territory.
Netanyahu is locked in a tough re-election battle with ex-military chief Benny Gantz and his Blue and White centrist alliance, and right-wing nationalist votes are key for his Likud.
Turkey calls annexation plans 'embarrasing'
Speaking in Jeddah, Turkish Foreign Minister Mevlut Cavusoglu said Netanyahu's "embarrassing" plan to annex the Jordan Valley was a "despicable" attempt to earn votes ahead of Tuesday's election and criticised what he called a lack of reaction from other Muslim countries.
"Israel, encouraged by the support of certain countries, is continuing its aggressive policies that are turning it into a racist, apartheid regime," Cavusoglu said.
"If the whole Muslim community had reacted together, the reckless plans, policies and behaviour of the United States and Israel would never have reached this point," Cavusoglu added.