Israel’s far-right Finance Minister Bezalel Smotrich says he will approve thousands of housing units in a highly controversial and long-delayed illegal settlement project in the occupied West Bank, saying the move “buries the idea of a Palestinian state”.

Smotrich on Thursday said he would approve tenders to build more than 3,000 homes in the E1 area settlement project that would connect Jerusalem and the existing illegal Israeli settlement of Maale Adumim, located several kilometres to the east.

“This reality finally buries the idea of a Palestinian state, because there is nothing to recognise and no one to recognise,” he said. “Anyone in the world who tries today to recognise a Palestinian state will receive an answer from us on the ground,” he said.

The Palestinian Ministry of Foreign Affairs called the new settlement plan an extension of crimes of genocide, displacement and annexation, and an echo of Prime Minister Benjamin Netanyahu’s statements regarding what he called “Greater Israel”.

In a statement before the announcement, Smotrich, who is also a minister in Israel’s Ministry of Defence with broad responsibility for approving settlements in the occupied West Bank, hailed the project as “Zionism at its best”.

“After decades of international pressure and freezes, we are breaking conventions and connecting Maale Adumim to Jerusalem,” Smotrich added.

The E1 plan has not yet received final approval, which is expected next week.

Israel Gantz, chairman of the Yesha Council – an umbrella organisation of illegal settlements in the West Bank – and head of the Binyamin Regional Council, also praised the “tremendous and historic achievement for the settlement movement”, according to Israel National News.

Gantz said it was a “true revolution in strengthening the settlement enterprise”, the outlet said.

Development of the E1 settlement – which is illegal under international law – has been frozen for decades.

Observers believe that its location will hinder the realisation of a future Palestinian state.

The planned settlement would effectively divide the occupied West Bank into northern and southern regions, preventing the establishment of a contiguous Palestinian territory connecting occupied East Jerusalem to major cities such as Bethlehem and Ramallah.

Israel postponed the plan in 2022 following United States pressure. But in recent months, Prime Minister Benjamin Netanyahu’s far-right government has approved road-widening projects in the area and begun restricting Palestinian access.

Maale Adumim Mayor Guy Yifrach praised the new settlement, saying it will “connect Maale Adumim to Jerusalem and serve as a Zionist response of settlement and nation-building”.

“The Palestinians aimed to establish a stranglehold through illegal construction – this project will thwart that effort,” he said, according to Israel National News.

On Wednesday, Israeli anti-settlement watchdog Peace Now said a total of 4,030 new housing units had been approved in the occupied West Bank.

Some 730 are west of the existing Israeli settlement of Ariel, while 3,300 had been approved in a new Maale Adumim neighbourhood that will connect it “with the industrial zone to its east”.

“The 3,300 housing units in Maale Adumim represent an increase of about 33 percent in the settlement’s housing stock – an enormous expansion for a settlement whose population has been stagnant at around 38,000 for the past decade,” it said.

It added that the Maale Adumim extension raised “serious questions about the need for the E1 plan”.