The announcement comes a day after the Palestinians won full membership of the United Nations Educational, Scientific and Cultural Organization (UNESCO).
Palestinian President Mahmoud Abbas says the move will speed up the destruction of the peace process.
Mr Palmor said they were "a response to unilateral measures aimed at confronting Israel at the UN and elsewhere on the international scene".
The Israeli government said Prime Minister Benjamin Netanyahu had called for the accelerated construction of some 2,000 housing units.
Peace talks between the Palestinians and Israel broke down more than a year ago. The Palestinians are demanding an end to settlement building.
Almost 500,000 Jews live in settlements on occupied territory. The settlements are illegal under international law, although Israel disputes this.
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