According to the Haaretz newspaper, the new homes will be constructed in the Beit El settlement.
Netanyahu’s decision comes after a wave of clashes between West Bank settlers and Israeli police, as security forces began demolishing two buildings in Beit El that a court had found unlawful. According to Haaretz, as many as 200 people came to protest the demolition, hurling rocks at the officers and burning tires.
Netanyahu had earlier voiced his stance against the demolition of the buildings.
Palestinians seek the recognition of their independent state on territories of the West Bank, including East Jerusalem and the Gaza Strip, according to frontiers in existence prior to the 1967 Six-Day War with Israel.
Israel has long been building settlements in occupied lands of the West Bank despite opposition from the United Nations.
Earlier this month, Israel's Justice Minister Ayelet Shaked announced the creation of a committee that would legalize Jewish settlements located in those occupied Palestinian territories deemed unlawful under international law.
Following the announcement, Israel detailed plans to grant construction permits for over 1,000 settlement units in the West Bank.