A Jerusalem committee gave its final approval last week to advance the construction of some 2,500 housing units in the East Jerusalem neighborhood of Givat Hamatos, the city’s deputy mayor said Wednesday.

The committee’s approval, given on the eve of the Jewish holiday of Rosh Hashanah last week according to anti-settlement group Peace Now, marks the final step before tenders can be issued in the area.

The neighborhood lies in territory annexed by Israel but claimed by Palestinians to be an integral part of a future Palestinian state.

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Critics say Jewish housing there would cut the West Bank city of Bethlehem off from Arab parts of the capital.

In a statement Wednesday, the municipality said Deputy Mayor Kobi Kahlon has signed an order approving the construction of some 2,500 homes in Givat Hamatos. Anti-settlement group Peace Now said the approval involved 2,610 units.

The move, news of which came just as Prime Minister Benjamin Netanyahu was meeting with US President Barack Obama in Washington, was largely symbolic, as the Jerusalem District Planning and Building Committee had in December 2012 formally announced that it would launch the major construction project at the site, in the south of the city.

According to the committee, half of the housing units in Givat Hamatos will be designated for Arab residents, while the remaining apartments will be housed by Jews, Army Radio reported.

Peace Now criticized the committee’s decision, calling it “destructive” and asserting that the advancement of the project would harm efforts to reach a peace agreement with the Palestinians.

“Givat Hamatos is destructive to the two states solution. Like the E1 plan, it divides the potential Palestinian state and blocs the possibility to connect the Palestinian neighborhoods in south Jerusalem with the future Palestinian state,” a statement issued by the group read.

“Netanyahu continues his policy to destroy the possibility of a two state solution. He is doing so in the West Bank, and he is doing so in East Jerusalem,” Peace Now charged.

Hanan Ashrawi, a senior Palestinian official, condemned the move. “These actions send a clear message to the world in general, and to the Palestinian people in particular, that Israel is committed more to land theft than to peacemaking. Israel’s unbridled settlement enterprise further constitutes a dangerous political insanity,” she said.

Israel has come under intense international criticism in the past for the planned construction in Jerusalem and other projects in the West Bank, including the controversial E1 corridor, which links Jerusalem and the settlement of Ma’aleh Adumim.

Last month, the United States and European Union struck out at Israel over its late August decision to appropriate about 1,000 acres of land near the West Bank settlement of Gvaot, in the Etzion Bloc, urging Jerusalem to nix the plan and saying it sent a “very troubling message” to those involved in negotiations for a peace agreement with the Palestinians.

In August, the army department charged with administering civil affairs in occupied territory said Israel had “declared 4,000 dunams (about 1,000 acres) at [the settlement of] Gvaot” as state land, adding that concerned parties have 45 days to appeal. The IDF stated that there was no claim of Palestinian ownership on the land in question, according to the Ynet news site.

Critics said the move to appropriate the land near the Etzion Bloc, close to the spot where three Israeli teenagers were kidnapped and killed in June, was “a stab in the back” to the Palestinian leadership.

Israel’s settler population in the West Bank increased by 2 percent in the first half of the year, according to a document published two weeks ago, signaling robust growth in the settlements even while Israel was conducting peace talks with the Palestinians.

The Yesha Council, the official umbrella group representing the more than 100 Jewish settlements in the West Bank, said the settler population grew to 382,031 as of June 30, up 2 percent from 374,469 on December 31. The projected 4 percent annual growth rate would be more than double Israel’s nationwide growth rate, according to official figures.

“It is clear that it is a thriving community that is here to stay,” said Dani Dayan, the chief foreign envoy of the Yesha Council.

Adiv Sterman and AP contributed to this report.