Minister of State for Media Affairs Mohammad Momani said that the decision is a "blatant violation" of the rights of the Palestinian people, especially their right to establish their independent state on their national soil, the Jordan News Agency, Petra, reported.
Palestinian officials have condemned the move and called on the global community to intervene.
In a statement released on Friday, British Foreign Secretary Boris Johnson described the new Israeli construction plan as "contrary to worldwide law", stressing that it "seriously" undermined the prospects of the so-called two-state solution.
The new colony will be built to accommodate Jewish settlers evacuated from the illegal (even under Israel law) settlement of Amona in February after a court order was issued.
The Zionist entity's recent approval of a first settlement in the occupied West Bank in 20 years has been met with strong denunciations from major European governments. "Germany will not recognize any change in the 1967 lines, which has not been agreed between the parties".
The White House on Friday welcomed Israel's new policy, noting however that "unrestrained" Israeli settlements "do not help advance peace." The settlements are considered illegal under worldwide law, though Israel disputes this.
"We send a clear message to the U.S. administration, the United Nations and to the European Union: Peace is not going to be achieved by tolerating such crimes", he said.
It comes despite US President Donald Trump asking Israeli Prime Minister Benjamin Netanyahu last month to "hold back" on settlement construction.
Hardline education minister Naftali Bennett, who has been outspoken against any curbs to settlement construction, said Sunday that Netanyahu's position was "reasonable", adding that the proposed limitations "in theory sound good, but will be tested in actions". However, if legal, security or topographical limitations do not allow adherence to those guidelines, new homes will be built outside the current settlement boundaries but as close as possible to them.