Israel said Thursday it was moving forward with controversial plans to build thousands of new housing units in the occupied West Bank, a development far-right Finance Minister Bezalel Smotrich said would “permanently bury the idea of a Palestinian state.

The Palestinian government condemned the scheme, calling it illegal and saying the fragmentation of territory would rip up peace plans for the region.

Bezalel Smotrich, the finance minister, said on Thursday that a plan to significantly expand a settlement near occupied East Jerusalem had won approval. But a procedural step remained.