Israel faced increasing pressure Monday, including from the United States, after saying it plans to expropriate 400 hectares (988 acres) of Palestinian land in the Bethlehem area in the south of the occupied West Bank.

Ally Washington, the United Nations and Egypt all called for an urgent rethink after Sunday's announcement, which angered the Palestinians and alarmed Israeli peace campaigners, and comes days after a long-term ceasefire between Israel and the Palestinians took hold.

According to the Israeli military, the land move was a political decision made after the June killing of three Israeli teenagers snatched in the same area, known to Israelis as the Gush Etzion settlement bloc.

"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."

Israeli Prime Minister Benjamin Netanyahu's policy of settlement expansion on land the Palestinians claim for a future state is deemed illegal by the European Union and an "obstacle to peace" by the United States.

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.

"The secretary-general calls on Israel to heed the calls of the international community to refrain from settlement activity and abide by its commitments under international law..."

Egypt -- which last week mediated a permanent truce between Israel and the Hamas rulers of the Gaza Strip to end a 50-day war -- denounced Israel's move.

"This is not a positive step -- it contradicts international law and will have negative consequences on the peace process," a foreign ministry statement in Cairo said.

The foreign ministry did not mention the Gaza truce talks, but insisted that Israel's planned West Bank land grab would be "an obstacle" to a two-state solution between Israel and the Palestinians.

Rights watchdog Amnesty International similarly denounced the Israeli plans, saying that it "appears to be the largest land grab in the occupied Palestinian territories since 1980."

"Israel's strategy of illegally confiscating land for settlements in the West Bank must stop once and for all," said Amnesty's Philip Luther.

The Palestinians have called for diplomatic action against Israel, while Israeli peace campaigners said the land expropriation is the biggest of its kind in three decades.