The tender, seeking bids from developers, would clear the way to begin construction of the E1 project.
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.
The E1 project iruns from the outskirts of Jerusalem deep into the West Bank. Critics say it would prevent the establishment of a contiguous Palestinian state in the territory.
Israeli Finance Minister Bezalel Smotrich, who oversees settlement policy, has long pushed for the plan to become a reality.
“The Palestinian state is being erased from the table not with slogans but with actions,” he said in August, when Israel gave final approval to the plan. “Every settlement, every neighborhood, every housing unit is another nail in the coffin of this dangerous idea.”
