Israel has approved a massive new building programme of Jewish settlement homes in the occupied Palestinian territories.

The announcement of 2,500 new housing units in the West Bank is one of the largest in years and marks a comprehensive rejection of December’s UN security council resolution, which described settlement building as a “flagrant violation” of international law and an obstacle to peace.

The decision was approved by the rightwing Israeli Prime Minister, Benjamin Netanyahu, and his defence minister, Avigdor Lieberman.

We are returning to normal life in Judea and Samaria,” Liberman said, announcing the plans.

According to the statement, Liberman and Prime Minister Benjamin Netanyahu agreed to approve plans for the units in order to answer local housing needs. Netanyahu said, “We are building, and will continue to build.”

Nabil Abu Rdainah, a spokesman for the Palestinian president, Mahmoud Abbas, said the move would have “consequences”. “The decision will hinder any attempt to restore security and stability; it will reinforce extremism and terrorism and will place obstacles in the path of any effort to start a peace process that will lead to security and peace,” he added.

The plans were condemned by Hanan Ashrawi, a member of the Palestine Liberation Organisation’s executive committee. She said: “It is evident that Israel is exploiting the inauguration of the new American administration to escalate its violations and the prevention of any existence of a Palestinian state.”

About 400,000 settlers live in the West Bank and a further 200,000 in East Jerusalem, which Israel seized in the 1967 Middle East war.