The security cabinet has discussed plans in recent days to construct both Israeli and Palestinian housing in Area C of the West Bank, public broadcasting corporation Kan reported Monday night.
It is unclear whether the plans for construction would be for new units or to legalize existing illegal structures however, no official decisions on the plans have been made.
Sources familiar with the matter told Haaretz that Prime Minister Benjamin Netanyahu's initiative for discussion included 700 Palestinian housing units and 6,000 Jewish settlement units which are currently in the process of approval.
In the coming days, U.S. President Donald Trump's son-in-law and senior adviser, Jared Kushner, is expected to arrive in Israel to discuss the economic chapter of his Middle East peace plan. Political sources believe that the relatively unusual discussion of Palestinian construction in Area C could be due to American pressure.
Mateh Binyamin Regional Council chief Israel Gantz and Samaria Regional Council head Yossi Dagan issued a joint statement in response to news of the plans, calling it "particularly worrying."
"The Palestinian Authority, with the assistance and funding of foreign elements, is carrying out massive illegal construction in these areas with the clear goal of establishing a terrorist state in the heart of the country," the two leaders wrote.
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"We hope that this does not, heaven forbid, constitute a gesture toward the government that will be established after the election," the statement added.
The head of the South Hebron Hills regional council, Yochai Damari, said that he was "stunned" by the news, adding "we are waging a struggle against the Palestinian chokehold on our settlement, and only that is a fitting topic to convene a cabinet meeting for."
Shlomo Ne'eman, head of the Gush Etzion Regional Council also slammed the plans, referring to "the suffering of the homeland, known as Area C, since the Oslo disaster."
"We discovered that the Arab approach of stealing a dunam and another dunam ... pays off for them," Ne'eman added.
The Prime Minister's Office has yet to comment. Plans for such buildings were not detailed during cabinet discussions. In the past, state officials have planned extensive building permits that were later discovered to be old plans that were recycled.