Israeli Prime Minister Benjamin Netanyahu attends the weekly cabinet meeting in Jerusalem January 15, 2017. [Photo/Agencies]

"In an agreement between Prime Minister Benjamin Netanyahu and Defense Minister Avigdor Lieberman, it was decided to approve 2,500 homes in Judea and Samaria (the Jewish biblical names for the West Bank)," said a statement by the defense ministry, referring to the Israeli name for the West Bank.

Most of the houses will be built in settlement blocs, the ministry said, adding that the new construction would be approved to "answer the housing needs and the continuation of the daily life."

"We are going back to normal life in Judea and Samaria," Lieberman said, referring to end of the term of Barack Obama, who criticized the settlement expansion, and the recent inauguration of the US President Donald Trump, who stated his support for the settlements.

The ministry did not elaborate on the locations of the new housing units but said that some of the construction was already agreed upon by previous governments, including hundreds of units in Beit El, a settlement south of Ramallah.

"We construct and we will continue to construct," Netanyahu said in a separate statement.

On Sunday, Netanyahu told a cabinet meeting that he has decided to lift restrictions on new construction for Jewish settlers in East Jerusalem.

Netanyahu also said he supports an "Israeli sovereignty over Ma'aleh Adumim," a major West Bank settlement.

However, he asked the ministers to postpone the vote on a bill to annex the settlement, putting forward by the pro-settler Jewish Home party, citing a request by the Donald Trump admiration "not to make surprise moves but to draft a joint policy."

The announcement came a few hours after the Jerusalem Local Planning and Building Committee approved 560 new homes in the urban settlement neighborhoods of Ramot, Ramat Shlomo, and Pisgat Ze'ev, in lands Israel annexed to Jerusalem in a move never recognized internationally.

Jerusalem Mayor Nir Barkat said more permits are expected to be issued after "eight difficult years with Obama, who pressured to freeze the construction."

Israel seized East Jerusalem in the 1967 Mideast War, along with the rest of the West Bank and the Gaza Strip. It later annexed East Jerusalem and declared it as part of its "eternal" capital, in a move that has never been recognized by the international community.