The government approved the construction in the settlements of Gush Etzion, Maale Adumim, Ariel and Kiryat Sefer in a rare Saturday-night decision.

The development came shortly after five members of an Israeli family were killed in the West Bank, in what Israel is calling a terror attack.

Throngs of mourners gathered in Jerusalem on day for the funeral of Ehud Fogel 36, his wife Ruth, 35, and their children Yoav, Elad and Hadas. The event was broadcast on Israeli television.

Israeli government spokesman Mark Regev said that "all objective data based on the investigation" led the government to believe "the only possible conclusion" was that the settlement murders were a terror attack. He would not elaborate on what evidence was leading investigators to that conclusion.

Interior Minister Eli Yishai argued that not enough new housing had been approved, saying the number should have been 5,000 units - 1,000 for each person murdered.

Nabil Abu Reudeina, a spokesman for Palestinian Authority president Mahmoud Abbas, called the Israeli decision "wrong and unacceptable" in a statement reported by the official Palestinian Authority news agency Wafa.