Israel has approved settlement plans in annexed territory. The move is likely to anger Palestinians and worry Israel's allies.
Israel on Monday gave the green light to controversial plans to build 1,500 homes in east Jerusalem.
"It reduced the plan from 1,600 to 1,500 and now the plan has to be resubmitted and meet the conditions in order to get final approval," said spokeswoman Efrat Orbach.
"It could take months more, or years," she added.
An Interior Ministry committee on Monday approved the new housing units in the Jewish Ramat Shlomo neighborhood. Palestinians claim part of the city as part of their rightful capital.
Although the approval is with immediate effect, the project must still go through subsequent planning stages, and it could be years before building starts.
The project was first mooted two years ago, when American Vice President Joe Biden visited Israel to energize Israeli-Palestinian peace negotiations. The untimely announcement caused a major diplomatic row that took months to heal.
The revelation is likely to spark anger among Palestinians, and heighten concern among Israeli allies who have expressed concern about settlement building in the West Bank and east Jerusalem. There are fears that the construction could sever the northern West Bank from the south; that would have repercussions for the territorial contiguity and viability of a Palestinian state.
sej/kms (AFP, dpa)