A local committee in Jerusalem announced the approval of plans to build 3,557 homes in eastern Jerusalem, according to anti-settlement monitoring group Peace Now.
One building area is between Har Homa and Givat Hamatos, and the other plans are on the edge of French Hill towards Mount Scopus.
The organization argued that the move would ruin chances for peace based on the two-state solution.
The plans will now move to a district committee on Jan. 17. Once approved, it would take a year or two for construction to start and be more difficult to stop the plan at that stage, said Peace Now.
The Jerusalem District Planning and Building committee delayed a settlement project in Atarot last month for about 9,000 homes north of Jerusalem.
Israeli Prime Minister Naftali Bennett spoke with U.S. Secretary of State Antony Blinken about the project before the announced delay.