"This morning, the local planning and building committee made the decision to advance (plans)... for 500 units in Ramat Shlomo," the Ir Amim anti-settlement NGO said, referring to an ultra-Orthodox Jewish settlement neighbourhood.

The plans had been on hold since 2014, it said.

More than 200,000 Israelis now live in communities in east Jerusalem, which Israel occupied in the Six-Day War of 1967 and later annexed.

The move was never recognised by the international community, which regards all Jewish settlements in the occupied territories as illegal, including those in east Jerusalem.

Betty Herschman of Ir Amim said the latest announcement had particular significance as it was the first since Donald Trump's upset US presidential election win earlier this month.

Israeli right-wingers have been hoping that the maverick Republican will prove far less critical of settlement expansion than President Barack Obama.