US President Donald Trump's administration opposed a planned vote on a controversial Israeli bill that critics say would amount to de facto annexation of Jewish settlements surrounding Jerusalem, a US official said Sunday.

Israeli Prime Minister Benjamin Netanyahu postponed a vote on the bill by a ministerial committee that was scheduled to take place on Sunday, with an Israeli official saying "diplomatic preparation" was needed.

It was a signal that Netanyahu was under pressure not to move forward from the White House, which has been seeking ways to restart long-stalled Israeli-Palestinian peace talks.

"I think it's fair to say that the US is discouraging actions that it believes will unduly distract the principals from focusing on the advancement of peace negotiations," a US official said on condition of anonymity.

"The Jerusalem expansion bill was considered by the administration to be one of those actions."

David Bitan, chairman of Netanyahu's governing coalition, told Israel's army radio on Sunday that "there’s American pressure that says that it’s a case of annexation."

He disputed that the bill amounted to "annexation".

According to Haaretz newspaper, Netanyahu told cabinet members on Sunday that the bill must be discussed with US officials before it can move forward.

The bill would absorb major Israeli settlements currently in the occupied West Bank into Jerusalem by enlarging the city limits.

Its opponents argue that it is a step towards full unilateral annexation of the West Bank settlements affected -- a move that would be sure to spark international outrage.

For the vast majority of the international community, the status of Israel's settlements, built on land the Palestinians see as part of their future state, is to be decided in peace negotiations.

The bill has drawn harsh criticism from Palestinians and those hoping to salvage the two-state solution.

Settlements affected are Maale Adumim, Beitar Illit, Efrat, Givat Zeev, and the Gush Etzion settlement bloc.

Intelligence and Transportation Minister Yisrael Katz, who has pushed for the bill, says it would add an additional 150,000 people to Jerusalem's population, strengthening its Jewish majority.

Israel occupied the West Bank, including east Jerusalem, in the Six-Day War of 1967. It later annexed east Jerusalem in a move never recognised by the international community.

It sees the entire city as its indivisible capital, while the Palestinians want the eastern sector as the capital of their future state.

Barack Obama's administration's was heavily critical of Israeli settlement activity, but Trump has been far less vocal on the issue.

His ambassador to Israel, David Friedman, is himself a supporter of Israeli settlements.

Israeli officials say around 12,000 settlement housing units will be given various stages of approval this year, four times the number in 2016.

Source: AFP