"Today's announcement once again proves that Israel is more committed to appeasing its illegal settler population than to abiding by the requirements for stability and a just peace," Hanan Ashrawi, an executive committee member of the Palestine Liberation Organisation, was quoted as saying by Reuters news agency.
The administration of US President Donald Trump has yet to comment on the Israeli vote, which was unanimous.
The new settlement will be used to house Jewish families evicted from Amona, an outpost that was cleared last month after the Israeli Supreme Court ruled it had been built illegally on private Palestinian land.
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