Palestinian leaders on Monday denounced an Israeli bill to legalise several thousand Jewish homes in the occupied West Bank, vowing to take up the issue at the UN Security Council.

They also sharply criticised a separate bill that would limit the volume of calls to prayers at mosques in Israel and Jerusalem, a measure government watchdogs have called a threat to freedom of religion and an unnecessary provocation.

A committee of Israeli ministers adopted the two bills on Sunday, though they must still be approved by parliament.

The settler bill had been pushed forward by Education Minister Naftali Bennett of the hardline Jewish Home party. Bennett last week called for an end to the idea of a Palestinian state after Donald's Trump's election win in the United States.

‘The recent Israeli measures are going to lead to catastrophe in the region,’ said Nabil Abu Rudeina, spokesman for Palestinian president Mahmud Abbas.

‘The Palestinian leadership will turn to the UN Security Council and all other international organisations to stop those Israeli measures.’

Palestinian foreign minister Riad al-Malki accused the Israeli government of seeking to ‘impose facts on the ground and create new realities by legalising the illegal actions that it commits.’

The bill to legalise Israeli homes in the West Bank was pushed through the committee despite opposition from Prime Minister Benjamin Netanyahu.

It was drafted in response to a court order requiring the Israeli outpost of Amona, which includes about 40 families, to be evacuated by December 25 because it was built on private Palestinian land.

The government has asked the high court to extend the deadline by seven months while it seeks a new location for the settlers, and Netanyahu fears the bill could jeopardise its case.

He is also concerned it could provoke an international backlash and possibly encourage US President Barack Obama to seek a UN Security Council resolution on the Israeli-Palestinian conflict before he leaves office on January 20.

The bill would allow for the legalisation of settlement homes built on private Palestinian land in communities that meet certain criteria.

The Palestinian landowners would be offered compensation in return for the land being seized.

The bill is expected to apply to between 2,000 and 3,000 homes in the West Bank.

The international community considers all Israeli settlements in Israeli-annexed east Jerusalem and the occupied West Bank to be illegal, whether they are authorised by the government or not.

The Israeli government differentiates between those it has approved and those it has not. Settlements like Amona are considered outposts as they have not been given Israeli government approval.

Settlements are seen as a major stumbling blocks to peace efforts as they are built on land the Palestinians see as part of their future state.