Binyamin Netanyahu, the Israeli prime minister, has approved construction of hundreds more settler homes on Palestinian land, even after the Israeli parliament rejected a bill to retroactively legalise some existing homes.

The new homes will include 300 to be built in the Beit El settlement and 550 others that Construction Minister Ariel Attias said on Thursday will be built elsewhere in the occupied West Bank.

Netanyahu had called for members of the Knesset to reject a bill, voted down on Wednesday by 69 votes to 22, that would have legalised the Ulpana outpost, built on the outskirts of Beit El near the city of Ramallah.

He argued that legalising the 30 apartments, which now are to be demolished by July 1, could have prompted an international backlash against the settler movement.

But he said later that he would not allow people to “use the legal system to harm the settlement movement,” and announced plans to add homes to Beit El.

In depth Al Jazeera’s Nadim Baba reports from Jerusalem on the conflict over the illegal settlements As expected, hundreds of Israeli settlers descended on the Israeli parliament on Wednesday, lending their support to a bill that would have saved an illegal outpost in the occupied West Bank. But the bill was defeated far more resoundingly than many predicted. The result was 69-22 against “legalising” the outpost of five houses in the Beit El settlement. According to Israel’s High Court, the houses were built on privately-owned Palestinian land and should be removed by July 1. But just about every settler that I spoke to at the Knesset demonstration said they were appalled by Binyamin Netanyahu’s hardline stance, which involved threatening to fire ministers who backed the legislation. On the other hand, Netanyahu is offering not just to relocate the houses within Beit El, but to build homes for 300 more families to move there. Not surprisingly, that has angered Palestinian activists, who accuse Netanyahu of giving in to pressure from the settlers. His insistence on continuing to expand what Israel calls “authorised” settlements, which are illegal under international law, is cited by the Palestinians as the reason they will not restart direct negotiations. Domestically, though, Netanyahu now has to defend himself against accusations of betrayal by the settlers, and he has caused major disquiet within his Likud party.

“Beit El will be expanded. The 30 families will remain in Beit El, and 300 new families will join them,” Netanyahu said in remarks broadcast on public radio.

Israel differentiates between “legal” settlements and “illegal” outposts, but the international community views all settlements on occupied territory as a violation of international law.

Netanyahu’s announcement was condemned by a spokesman for Palestinian President Mahmoud Abbas who said the decision to Beit El would hinder peace efforts.

“We strongly condemn Netanyahu’s announcement of the settlement decision on Palestinian land, which is an obstacle to efforts to push the peace process forward,” said Nabil Abu Rudeina, the spokesman.

US condemnation

The US State Department said that continued Israeli settlement activity “undermines peace efforts and contradicts Israeli commitments and obligations”.

“You know, our position on settlements remains unchanged. We do not accept the legitimacy of continued Israeli settlement activity,” said spokesman Mark Toner.

Wednesday’s bill in the Knesset was an attempt by settlers and their supporters in parliament to circumvent a supreme court ruling ordering the removal of five buildings from a settlement outpost known as the Ulpana neighbourhood by July 1.

The bill sought to offer compensation to Palestinians whose private land had been taken over by settlers rather than returning their land, if they had not lodged a legal demand to evacuate the land within four years of the settlement.

Hossam Zomlot of the Commission for International Affairs of the Fatah movement described Netanyahu’s objection to the bill as a “cheap attempt” to deceive the international community “and appear as the man who is confronting settlements”.

“But the effect is that he is engaged in actually strengthening the settlement movement,” he told Al Jazeera.

“He would like to create confusion among the Israeli public and the international community between what he calls illegal outposts and legal settlements. There’s nothing as such. Every single stone that was built after 1967 is illegal.”

Negotiations between Israel and the Palestinians broke down three years ago, and the Palestinians refuse to restart negotiations until Israel freezes settlement construction in the occupied West Bank and East Jerusalem.

The Palestinians claim both areas, captured by Israel in the 1967 Middle East war, for a future state.

Netanyahu says talks should resume without any preconditions and has refused calls for a full settlement freeze.