UN secretary-general Ban Ki-moon has said that he is "alarmed" by Israeli plans to appropriate almost 1,000 acres of Palestinian land in the occupied West Bank, his spokesman said.
The land of five Palestinian villages near Gvaot was seized as state land, in order to create a new Israeli settlement.
"The secretary-general is alarmed by yesterday's announcement by Israeli authorities to declare as so-called 'state land' nearly 1,000 acres of land in the Bethlehem area of the West Bank," the spokesman said.
"The seizure of such a large swathe of land risks paving the way for further settlement activity, which – as the United Nations has reiterated on many occasions – is illegal under international law and runs totally counter to the pursuit of a two-state solution.
"The secretary-general calls on Israel to heed the calls of the international community to refrain from settlement activity and abide by its commitments under international law and the Quartet Road Map."
Israeli minister issues warning
Following the announcement of the controversial decision, Israeli finance minister Yair Lapid warned about the consequences for the country in the international arena.
"We need more measured policy conduct, and not to generate unnecessary disputes with the United States and the world," he said. "What is this good for, of all times, now?
"This was a grab that was not brought before the cabinet and at this time simply causes damage to the state of Israel."
British foreign secretary Phillip Hammond condemned the land grab of Palestinian villages, the biggest by Israel in 30 years, as "particularly ill-judged".
"Our position on settlements is clear," he said. "They are illegal under international law, present an obstacle to peace, and take us further away from a two-state solution at a time when negotiations to achieve this objective urgently need to be resumed."
The expropriation of the land has been justified by Israeli officials as a response to the kidnap and murder of three Israeli teenagers in June.
Israel's economics minister, Naftali Bennett, said that the decision was an "appropriate Zionist response to murder. What we did yesterday [Sunday, 31 August] was a display of Zionism. Building is our answer to murder."