Finance Minister Yair Lapid warned Tuesday that Israel was eroding its international support after Washington joined a chorus of criticism of its biggest grab of Palestinian land since the 1980s.
Lapid complained that the cabinet had not been consulted about Sunday's announcement of the confiscation of 400 hectares (988 acres) of land in the occupied West Bank to pave the way for further settlement building.
"The announcement, which wasn't brought to the cabinet, regarding 900 acres of land for building in Gush Etzion (between Jerusalem and Hebron) harms the State of Israel," Lapid told an economic conference in Tel Aviv.
"Maintaining the support of the world was already challenging, so why was it so urgent to create another crisis with the United States and the world?" he asked.
Lapid, a moderate within the governing coalition, was alluding to widespread international condemnation of the high Palestinian civilian death toll during Israel's 50-day war in Gaza.
Justice Minister Tzipi Livni, another cabinet moderate who served as chief negotiator in abortive US-brokered talks with the Palestinians, had already criticised the land grab.
"It weakens Israel and threatens its security," she said on Monday.
But Economy Minister Naftali Bennett, whose far-right Jewish Home party draws much of its support from the settler lobby, defended the move, saying it was retaliation for the murder of three Israeli teenagers in the West Bank.
"It's 120 years that the world has opposed our construction, and we'll continue to do it," he said, equating settlement building in the West Bank with construction in what is now Israel in the years before its creation in 1948.
The international community regards all Jewish settlements in the occupied West Bank, including annexed east Jerusalem, as illegal, and Sunday's announcement by the army drew strong US and UN criticism.
"This announcement, like every other settlement announcement Israel makes, planning step they approve, and construction tender they issue, is counterproductive to Israel's stated goal of a negotiated two-state solution with the Palestinians," a US State Department official said.
"We urge the government of Israel to reverse this decision."
UN Secretary General Ban Ki-moon was "alarmed" by Israel's plans, his spokesman said.
"The seizure of such a large swathe of land risks paving the way for further settlement activity, which -– as the United Nations has reiterated on many occasions -– is illegal under international law and runs totally counter to the pursuit of a two-state solution," the spokesman said.