The Hebrew daily Maariv said the municipality would build a synagogue and a school in Gilo on Palestinian lands between Jerusalem and Bethlehem.
The report cited the spokesman of the municipality as saying in response that the plan of the buildings was approved in principle in 1995.
The Israeli government considers Gilo as “an integral part of Jerusalem.”
The issue of West Bank settlements in West Bank and East Jerusalem is one of the thorniest issues the stall the resumption of peace talks between Palestinian Authority and Israel.
The two sides' agreement on launching US-brokered proximity talks was announced earlier in March, but turned quickly into tumbling after the Israeli government approved a proposal to construct 1,600 housing units in a Jewish neighborhood in East Jerusalem, an area claimed by Israel as part of its "indivisible capital" while deemed by the Palestinians as the capital of their future state.
The Obama administration, through its Middle East peace envoy George Mitchell, is trying in the last two to find ways to get Israeli-Palestinian peace talks back on track.
The US has demanded that Israel reverse new housing plan in East Jerusalem, which Israeli Prime Minister Binyamin Netanyahu has so far rejected. Obama also asked Netanyahu during their last meeting at the White House to build confidence for the Middle East peace talks.
