Israel’s parliament passed a law on Monday retroactively legalising about 4,000 settler homes built on privately-owned Palestinian land in the occupied West Bank, a measure that has drawn international criticism.
The legislation has been condemned by Palestinians as a blow to their hopes of statehood.
However, passage of the law may only be symbolic, as it contravenes Israeli supreme court rulings on property rights.
Israel’s attorney-general has said it is unconstitutional and that he will not defend it at the supreme court.
Though the legislation, passed by a vote of 52 to 60, was backed by prime minister Binyamin Netanyahu’s right-wing coalition, it has raised tensions in the government.
Political sources have said Netanyahu privately opposes the bill, over concerns it could provide grounds for prosecution by the International Criminal Court in The Hague.
But the far-right Jewish Home party, a member of the coalition looking to draw voters from Netanyahu's Likud, pushed for the legislation after the forced evacuation of 330 settlers last week from an outpost built on private Palestinian land.
With Mr Netanyahu under police investigation on suspicion of abuse of office, an allegation he denies, Likud has been slipping in opinion polls.
Opposing the law would have risked alienating his supporters and ceding ground to Jewish Home.
Last-minute appeals this week by Mr Netanyahu to postpone the vote until after he meets US president Donald Trump in Washington on February 15th were refused by Jewish Home, political sources said.
Mr Netanyahu himself did not attend the vote because he was on a plane back from a meeting in London with British prime minister Theresa May when it was held.
Response
Hanan Ashrawi, a senior member of the Palestine Liberation Organisation, the main Palestinian political umbrella body, said in a statement that the law gave settlers a green light to "embark on a land grab".
"Prime minister Binyamin Netanyahu and his extremist, racist coalition government are deliberately breaking the law and destroying the very foundations of the two-state solution and the chances for peace and stability," Ashrawi said.
The UN special co-ordinator for the Middle East peace process Nickolay Mladenov said in a statement that the law "will have far reaching legal consequences for Israel and greatly diminish the prospects for Arab-Israeli peace".
Opposition leader Isaac Herzog of the Zionist Union said a black flag hung over the "insane law that threatens to destroy Israeli democracy".
Israeli attorney-general Avichai Mandelblit has described the law as unconstitutional and a breach of international law, since it allows expropriation of private land in areas Israel seized in the 1967 Middle East war.
Under the new law, settlers could remain on the land if they built there without prior knowledge of Palestinian ownership or if homes were constructed at the state’s instruction.
Palestinian owners would receive financial compensation.