European powers on Friday condemned Israel's decision to approve thousands more settlements in occupied Palestinian territory, calling it a "counterproductive" move that undermines regional peace efforts.

"The expansion of settlements violates international law and further imperils the viability of a two-state solution to bring about a just and lasting peace to the Israeli-Palestinian conflict," said a joint statement from the foreign ministers of Germany, France, Britain, Italy and Spain.

"As we have emphasised directly with the government of Israel, this step furthermore undermines efforts to rebuild trust between the parties with a view to resuming dialogue," they said, urging an immediate halt in settlement construction.

*This story was edited by Ahram Online.