US condemns Israeli plans to legalise settlements

The US state department has again voiced concern over Israeli plans to legalise some 4,000 settler homes in the West Bank, calling the legislation "profoundly damaging".

Israeli lawmakers gave the bill preliminary approval on Monday despite near universal criticism of the law to legalise the illegal settlements.

Strong supporters of the bill - including those who outright oppose a Palestinian state - cheered on the initial vote and said they hoped it would lead to eventual Israeli annexation of most of the occupied West Bank.

Despite the US' close relations with Israel, the state department views this as a dangerous step and an obstacle to peace.

"Enacting this law would be profoundly damaging to the prospects for a two-state solution," State Department Spokesman Mark Toner said.

"We've also been troubled by comments that we've heard by some political figures in Israel that this would be the first step in annexing parts of the West Bank."

The bill must pass three more votes in parliament before it becomes law, with the first likely to be held on Wednesday.

"We're deeply concerned about it," Toner said.

"We hope that it does not become law. We certainly hope that changes or modifications can be made to it."