Israel has approved hundreds of new settlement homes in occupied East Jerusalem, after the staunch pro-Israel US President Donald Trump took office.
Jerusalem Deputy Mayor Meir Turgeman told AFP: "Now we can finally build."
Israel's PM reportedly delayed approval given the opposition of Barack Obama, who infuriated Israel by allowing a UN resolution against settlements to pass.
Settlements in East Jerusalem are considered illegal under international law, though Israel disputes this.
New Zealand co-sponsored and voted for a resolution passed by the United Nations Security Council last month, that called Israeli settlement building in occupied territories 'illegal' and demanded that it stop.
The resolution passed after the United States - which, as a permanent Security Council member, holds the power of veto - abstained from the vote.
At the start of his cabinet meeting on Sunday, Prime Minister Benjamin Netanyahu said he would speak to Mr Trump later on Sunday evening.
"There are many issues between us, including the Israeli-Palestinian issue, the situation in Syria and the Iranian threat," he said.
Jerusalem's City Hall approved construction permits for 566 new homes in the East Jerusalem settlements of Pisgat Zeev, Ramat Shlomo and Ramot.
Mr Turgeman said: "I was told to wait until Trump takes office because he has no problem with building in Jerusalem.
"The rules of the game have changed with Donald Trump's arrival as president. We no longer have our hands tied as in the time of Barack Obama."
He said the delay was at the request of Mr Netanyahu in the wake of the 23 December UN Security Council resolution opposing Israeli settlement construction.
The US refusal to veto the resolution marked the lowest ebb of deteriorating relations between the Obama administration and the Israeli government.
Mr Obama regarded opposing new settlement homes as a key plank in pursuing a possible "two-state solution" to ending the decades-old conflict between Israelis and Palestinians.
Settlements are communities established by Israel on land occupied in the 1967 Middle East war. This includes the West Bank, East Jerusalem and the Golan Heights.
More than 500,000 Jews live in about 140 settlements built since the occupation.
The issue has long been a major source of dispute between Israel and most of the international community, including the US.
The latest UN Security Council resolution stated that the establishment of settlements "has no legal validity and constitutes a flagrant violation under international law and a major obstacle to the achievement of the two-state solution and a just, lasting and comprehensive peace".
The resolution infuriated the Israeli government, particularly concerning East Jerusalem. Israel sees the whole of Jerusalem as its capital. The Palestinians want East Jerusalem as the capital of their future state.
Negotiations between Israel and the Palestinians broke down in 2014.
A summit aimed at kick-starting peace talks was held in Paris last Sunday but neither side was invited to participate. It restated the desire for a two-state solution.