The Jerusalem Local Planning and Building Committee on Monday gave its approval to build 130 housing units in an area located beyond the Green Line, between the neighborhoods of Gilo and Beit Safafa. The area was previously designated for the construction of hotels.

The plan was first uncovered by Ynet during Prime Minister Benjamin Netanyahu's meeting with US Secretary of State Hillary Clinton. A week later, following mounting pressure, the Jerusalem Municipality instructed the committee to remove the plan from its agenda. However, a green line has now been given to a private contractor to begin construction.

During a meeting with reporters in Tel Aviv, Netanyahu addressed the issue of construction in the capital, calling it "completely transparent."

The prime minister noted that "up until recently we have been accused of building in Jerusalem – and we plead guilty to the charges. It is our capital; no one is expanding to new places," he said.

The latest approval comes in stark contradiction with the Municipality's official policy, according to which it is forbidden to rezone land for residential use, due to the city's shortage in hotel rooms.

Jerusalem Mayor Nir Barkat previously stated that he wants to increase the annual number of tourists visiting the Holy City, and city officials raised an eyebrow over the controversial decision, which deviates from the municipality's stated policy.

Councilman Yossef Alalo said his opposition to the plan is "both political and professional. Politically, it will influence ties between Israel and the Palestinians, and professionally, there is no doubt that this is a direct continuation of Holyland.

"There is no such thing as exchanging hotels for housing units. This plan has so many faults and deficiencies," Alalo added.

Meanwhile, Likud faction chairman in Jerusalem and committee member Elisha Peleg lauded the approval, saying "I struggled for this plan, and refused to remove it from the committee's agenda. Gilo is no different than any other neighborhood in Jerusalem, and these additional units will help deal with the housing shortage in the city."