An Israeli official has said another step of plans to build 1,100 new hotel rooms in East Jerusalem (al-Quds) has been approved.
Interior ministry spokeswoman Efrat Orbach said on Tuesday the plans were initially presented to the relevant committee five years ago.
The hotel rooms are part of a huge tourism project in the Givat Hamatos settlement.
The Israeli rights group, Peace Now, has slammed the move as an attempt to divide East Jerusalem and cut it off from the West Bank.
The group has accused Tel Aviv of pushing ahead with the plan before the elections to prevent any future agreement on a two-state solution with the Palestinians.
"The government is trying to create as many facts on the ground as possible before the elections in order to prevent an agreement with the Palestinians," said Hagit Ofran, director of the Settlement Watch project at Peace Now.
The international community regards all the Israeli settlements across the West Bank as illegal under international law.