Decision allegedly comes hours after Netanyahu finalized narrowly formed right-wing coalition.
The Jerusalem District Planning Committee approved the construction of 900 homes in the primarily ultra-Orthodox east Jerusalem neighborhood of Ramat Shlomo, Peace Now announced on Thursday.
The decision comes hours after Prime Minister Benjamin Netanyahu finalized his newly, and narrowly, formed right-wing coalition.
“They’ve approved the request, and now they’re allowed to build,” Peace Now spokeswoman Hagit Ofran told AFP.
The initial announcement of funding for the development by the Jerusalem Municipality’s Finance Committee during US Vice President Joe Biden’s 2010 visit to Israel led to a major diplomatic row with Washington.
The plan was also condemned by governments and organizations around the world as a destabilizing factor for peace talks between Israel and the Palestinians.
Moreover, US criticism is widely believed to have contributed to a de facto freeze that nearly brought all construction in Jewish neighborhoods in east Jerusalem to a halt for roughly three years after the development was announced.
To ease tensions at the time, Prime Minister Binyamin Netanyahu told Washington that construction in Ramat Shlomo would not begin for at least two years.