Israeli authorities on Wednesday approved a major expansion of an east Jerusalem settlement, signing off on plans to add 176 homes, the city's deputy mayor said.

The expansion would create the largest Israeli settlement inside a Palestinian neighbourhood of the city, NGOs say. It will allow the Nof Zion settlement to add 176 housing units to the 91 existing homes.

The settlement is located in the annexed east Jerusalem Palestinian neighbourhood of Jabel Mukaber. The plans were approved by a Jerusalem planning committee, Deputy Mayor Meir Turjeman told AFP.