Israel's Defense Ministry has revived a plan it had shelved under U.S. pressure to build a new Jewish settlement in the occupied West Bank, government officials said on Thursday.

A ministry committee approved the construction of 20 housing units in Maskiot, an abandoned military base in the Jordan Valley for some of the families removed from settlements in the Gaza Strip during Israel's pullout in 2005, the officials said.

But the project cannot go ahead without approval from Prime Minister Ehud Olmert and Defense Minister Ehud Barak.

Such a move would probably draw further opposition from the United States, which is trying to broker a peace deal between Israel and the Palestinians before President George W. Bush leaves office in January.

"We condemn this Israeli decision in the strongest possible terms," said Palestinian negotiator Saeb Erekat. "This is undermining us, and killing and destroying the peace process."

Asked about the Maskiot plan, Olmert spokesman Mark Regev said the prime minister had yet to receive any new request to build homes there.

"Israel will continue to honor our commitments. There will be no new settlements, there will be no expansion of existing settlements and there will be no expropriation of land for settlement construction," Regev said.

Olmert has continued to allow building within West Bank settlements that Israel considers to be part of Jerusalem and which it says it will keep in any peace agreement.

The Palestinians say settlements, which the World Court has deemed illegal, could deny them a viable and contiguous state.

In 2006, the United States pressured Israel to halt plans to build settler homes in Maskiot, saying it would violate the terms of a U.S.-backed peace road map.

The road map calls for a halt to Jewish settlement activity in the West Bank and for Palestinians to rein in militants.

Israel Radio said a revival of the Maskiot plan was part of a deal between the Defense Ministry and settler leaders under which settlers would agree to evacuate West Bank outposts they established without Israeli government approval.

"Twenty units in the Jordan Valley is significant, as there are only 1,000 (for Israelis) in the entire Jordan Valley," Dubi Tal, head of the area's local Israeli council, told Israel Radio.

Israel's Peace Now movement, which opposes Jewish settlement in the West Bank, said "capitulation to the settlers" would kill chances for a two-state solution to the Israeli-Palestinian conflict and "eventually drag us to a bi-national state".