Jerusalem (AFP) - Israeli Prime Minister Benjamin Netanyahu approved Wednesday the "immediate" construction of 300 settler homes in the occupied West Bank as his government came under pressure from right-wing Jewish groups.

A senior Palestine Liberation Organisation official denounced the plans to build new homes as "war crimes" and accused Israel of sabotaging peace efforts.

West Bank settlements are major impediments to peace negotiations with the Palestinians, who see the land as part of a future independent state, and Western nations have called on Israel to halt such projects.

Both the United Nations and the European Union condemned Wednesday's announcement.

UN chief Ban Ki-moon said "settlements are illegal under international law, an impediment to peace and cannot be reconciled" with Israel's "stated intention to pursue a two-state solution," his spokesman said in a statement released in New York.

Ban urged Israel "to halt and reverse such decisions in the interest of peace".

A spokesman for the EU also said the decision called into question Israel's "stated commitment to a negotiated two-state solution in the Middle East peace process".

The decision comes amid already strained relations between Israel and the United States, particularly over the July 14 nuclear deal with Iran, but Netanyahu is also under pressure to hold on to his razor-thin majority in parliament.

"After consultations in the prime minister's office, the immediate construction of 300 homes in Beit El has been authorised," Netanyahu's office said, adding that planning for another 504 homes in annexed east Jerusalem had also been approved.

According to the statement, the 300 units had been promised three years ago following the demolition of other homes in the Beit El settlement.

- Demolition order -

The approval came after the Israeli High Court upheld earlier Wednesday a demolition order for two structures being built illegally in Beit El.

The planned demolition had drawn protests from settler groups, who clashed with police at the site on Tuesday and Wednesday.

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Netanyahu had said he opposed the demolition, which began Wednesday.

Right-wing members of his government also spoke out strongly against the demolition, and Education Minister Naftali Bennett addressed protesters at the site.

On Wednesday, he immediately hailed the decision on new construction announced by Netanyahu's office.

"This decision is a Zionist response," Bennett of the right-wing Jewish Home party said in a statement. "This is the way in which we will build our country."

Netanyahu holds only a one-seat majority in parliament following March elections and settler groups wield significant influence in his government.

Israel's government does not consider state-authorised settlements in the occupied West Bank to be illegal.

They are seen as further complicating peace negotiations aimed at leading to an independent Palestinian state. Talks have been stalled since last year.

"These settlement measures and war crimes are part of a plan by Israeli leaders to impose a 'Greater Israel' on historic Palestine and destroy the two-state solution and the chance for peace," senior PLO official Hanan Ashrawi said.

The two buildings being demolished in Beit El were reportedly on private Palestinian land that was seized by the army in the 1970s.

Several hundred protesters clashed with police Tuesday as authorities took control of the buildings, then again Wednesday as demolition started.

Police used water cannon to push back protesters and detained a number of people, an AFP photographer reported.

In a separate incident Tuesday, several hundred people illegally entered the former Sa-Nur settlement in the northern West Bank that Israel had evacuated in 2005.

Israel seized the West Bank in the 1967 Six-Day War and nearly 400,000 Jewish settlers currently live there.