Prime Minister Benjamin Netanyhau of Israel has ordered 300 new homes to be built in the Jewish settlement of Bet El on the West Bank.
Parliament earlier voted against a proposal that would have legalised several existing homes built on private Palestinian land in the same area.
Mr Netanyahu, who opposed the bill, said he would honour a Supreme Court order to demolish homes on private Palestinian land at the Ulpana outpost. They are illegal under Israeli law and the government agreed to remove them in 2003.
The BBC reports all settlements in the West Bank and East Jerusalem are considered illegal under international law, though Israel disputes this.
Beit El is built on land captured by Israel in the 1967 Middle East war. Palestinians say it should be part of their future state.