"Mr. Barak will within 48 hours give his approval for the construction of 450 to 500 housing units in the larger Israeli settlements in the (West Bank)," a ministry spokeswoman told AFP.
Construction within the settlements requires the approval of the defence ministry.
Earlier Sunday, Transport Minister Yisrael Katz told public radio that Prime Minister Benjamin Netanyahu "will announce in the coming days the construction of several hundred additional homes" in the occupied West Bank.
Netanyahu did not address the issue of settlements at the start of Sunday's weekly cabinet meeting, but on Friday a senior official said Netanyahu would approve a burst of settlement building in the West Bank before considering a moratorium sought by the United States.
That announcement, coming just days ahead of another visit to the region by US Middle East envoy George Mitchell, has been widely criticised by Israel's main ally Washington, the Europeans and the Palestinians.
Palestinian president Mahmud Abbas blasted the plans as "not acceptable," while top negotiator Saeb Erakat said they "undermine all efforts exerted by the (US President Barack) Obama administration to revive peace."
Abbas said that if Israel went ahead with the plan, there would be no point in holding a three-way meeting between him, Netanyahu and Obama on the sidelines of the UN General Assembly later this month.
Washington has for months pushed Israel to freeze all settlement activity and for Arab states to take steps towards normalising relations with it in order to revive Middle East peace talks suspended late last year over Israel's war on the Gaza Strip.
Katz said that so far Washington has been unable to secure sought-after gestures by Arab countries, such as opening trade missions, opening airspace to Israeli aircraft and issuing tourist and business visas.
"President Obama has not succeeded in convincing the Arab countries to make moves to help negotiations resume. So Saudi Arabia has refused to authorise Israeli planes to use its airspace," Katz said.
The heads of the Arab League and the Islamist Hamas movement meanwhile urged Arabs not to take any steps to normalise ties with Israel as long as it continues building settlements.
"It is impossible to speak of normalisation when Israel rejects any significant measure," Arab League chief Amr Mussa said at a joint news conference in Cairo with Hamas supremo Khaled Meshaal.
"I don't believe that any Arab government can offer Israel the gift (of normalisation) on a silver platter," he said.
"I believe that there will be a very violent reaction across the Arab world should we learn that someone normalised (ties with Israel)," he added.
According to Israeli media, after approving the new settlement construction, Netanyahu would then agree to a temporary and conditional settlement halt.
"We are not speaking about a freeze," but rather an "easing" of construction, Katz said.
The spurt of settlement building is part of Netanyahu's efforts to appease the hawks in his rightwing Likud party who virulently oppose any freeze, according to media reports.
Any moratorium on construction would exclude some 2,500 homes already being built in the West Bank, as well as any building in annexed east Jerusalem.
Anti-settlement group Peace Now has slammed Netanyahu's move as "a virtual freeze, while the construction in West Bank and east Jerusalem will continue better than ever."
The Palestinians have demanded a halt to all settlement activity -- including in east Jerusalem -- before a resumption of peace talks, which were revived in November 2007 but made little progress.
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