Brussels: The European Union on Friday expressed concern over the Israeli government's recent decision to allocate new funding for illegal settlement expansion in the occupied West Bank, warning that the move could further undermine prospects for a two-state solution. "The Israeli government's recent decision to allocate significant new funding to settlement expansion in the West Bank is a worrying development," the bloc's foreign policy chief Kaja Kallas' office said in a statement.

According to Anadolu Agency, the EU said the decision would lead to the "further entrenchment of settlements in sensitive areas of the West Bank and contribute to the fragmentation and isolation of Palestinian communities, leaving them exposed to greater risks of human rights violations."

The bloc also rejected Israel's declaration of the settlement of Givat Ze'ev, located in the West Bank, as an official municipality of Israel, reaffirming its position of non-recognition of Israeli sovereignty over territories occupied since June 1967.

"The EU reiterates its call on Israel to refrain from further settlement expansion, the legalization of outposts, land appropriation, demolitions, evictions and other unilateral measures that undermine the viability of the two-state solution," the statement said.

Around 500,000 Israeli occupiers live in illegal settlements across the occupied West Bank, in addition to 250,000 living in settlements in occupied East Jerusalem, according to the Israeli anti-settlement watchdog Peace Now.

The UN considers the occupied West Bank, including East Jerusalem, to be occupied Palestinian territory and maintains that Israeli settlements there are illegal under international law.