One day before Hillary Clinton begins her maiden visit to Israel and the West Bank as the U.S. secretary of state, an Israeli peace group announced more settlement expansion plans on Palestinian territories, posing an even tougher challenge to the new American administration's peace endeavors.

In a report released on Monday, Peace Now said the Israeli authorities have plans for 73,302 new housing units in Jewish settlements, which would double the number of settlers in the occupied territory and blow the chances for a two-state solution to the Palestinian-Israeli conflict.

It added that 15,156 units have already been approved, while an additional 58,000 were pending approval. Peace Now warned that if all these plans are realized, the number of settlers in the territories will be doubled to 600,000.

The activist group estimates more than 280,000 Jewish settlers living in 121 settlement blocks in the West Bank and another 200,000 in East Jerusalem, which Israel annexed after its capture in 1967 but has not been internationally recognized.

Many Middle East experts agree with Peace Now in warning that the expansion of the settlements and the demographic growth of Israelis in the occupied territories – where the future Palestinian state is aspired to be established – destroy any chance for a viable peace solution that entails two states.

"The government has the power to decide not to carry out plans, or even to halt construction that has begun," Peace Now said in its report.

However, the next government that Israeli prime minister-designate, right-wing Likud leader Benjamin Netanyahu, is trying to form is expected to follow through with the expansion plans.

Netanyahu has previously said that while his government would not build new settlements, it would construct within existing ones to accommodate the "natural growth" of their populations. In other words, he would pursue the same policy of the outgoing government of Ehud Olmert, which had multiplied its expansion plans in the past 16 months.

The Housing Ministry replied to the peace group's report by brushing aside the seriousness of the matter, saying it was making "a big deal out of nothing."

But it is a big deal for the Palestinians and international mediators trying to revive a peace process that has been generally paralyzed because of settlement expansion, which is dangerously changing realities on the ground.

Plus, this expansion violates the U.S.-backed international peace road map, which called for a halt to all settlement activity, including "natural growth," and dismantling those built since 2001. But settlement construction jumped 60 percent in 2008 after Palestinian-Israeli peace talks were relaunched at Annapolis in November, and settler population growth in the West Bank and East Jerusalem has increased by 400 percent in 10 years.

Since Israel insists on keeping settlements in the West Bank and East Jerusalem, as well as in-roads leading to the settlements, under any peace agreement, the Palestinians will be effectively left without contiguous lands on which to establish a state.

Palestinians, who see settlement expansion as consolidating the occupation, complain that the international community has done little, if anything, to challenge Israel's illegal activities in the last eight years, and hope that the U.S. Barack Obama administration will deal with the issue more vigorously than its predecessor under George W. Bush.

The Obama administration has vowed to quickly engage in Middle East peace and named a special envoy who in 2001 had sharply criticized Israeli settlement activities. Since his appointment, former Senator George Mitchell has made two trips to the region, but it remains to be seen whether the new administration will actually challenge Israel over its settlement expansion policies.

Speaking in Egypt's Sharm el-Sheikh Monday, at a donors' conference for the reconstruction of Gaza in the aftermath of a destructive Israeli war, Clinton said the United States will work toward a Palestinian state and comprehensive peace.

She made those vague remarks one day before she travels to Israel and the West Bank, which Arab diplomats say they hope would entail a new and clear U.S. position on how Washington plans to pursue a two-state peace solution in the wake of alarming Israeli settlement expansion.

Palestinian officials told the Middle East Times that if the Obama administration is serious about a two-state solution, it must start looking at settlement activities not only as an obstacle to peace, but to declaring them illegal – which they already are under international laws.

Arab commentators say if Israeli settlement expansion continues to be allowed in this manner, the Israelis might find themselves faced without the two-state option, which they claim as the only solution. The only choice left would be a democratic one-state solution, which most Israelis do not want. And maintaining the occupation is not even on the table if the goal is peace.