Israel on Wednesday gave final approval for a long-disputed settlement project in the occupied West Bank, a move that Palestinians and rights groups warn could split the territory in two and deal a devastating blow to prospects for a future Palestinian state.

Settlement development in E1, an open tract of land east of Jerusalem, has been under consideration for more than two decades, but was frozen due to U.S. pressure during previous administrations.

An Israeli planning committee is set to debate approval of a highly contested settlement project in the occupied West Bank on Wednesday, a move critics say could severely undermine prospects for a future Palestinian state.