The development has drawn criticism from Britain, France, Germany, Italy, the Netherlands, Norway and Canada, which issued a joint statement describing Israel’s decision to proceed with construction tenders as unacceptable.
The countries said the planned development in the occupied West Bank would further undermine the prospects of establishing a viable two-state solution.
Britain had already summoned Israel’s chargé d’affaires to formally protest the issuance of tenders for the new settlement project.
The E1 area, located east of Jerusalem and between the city and the Ma’ale Adumim settlement, has long been a highly sensitive issue in the Israeli-Palestinian conflict.
Palestinians and international critics have warned that development there could fragment the West Bank and complicate the establishment of a contiguous Palestinian state.
The latest move comes amid heightened international concern over Israeli settlement expansion in the occupied West Bank and its potential impact on future peace negotiations.