Plans to expand a West Bank settlement by up to 2,500 homes drew Palestinian condemnation Monday and highlighted the challenges awaiting President Barack Obama, whose Mideast envoy is known for his opposition to settlement construction.

Israel took a step toward the possible expansion of the Efrat settlement by taking control of a nearby West Bank hill of 423 acres. The rocky plot, lying deserted Monday, was recently designated state land, Efrat Mayor Oded Revivi confirmed, adding that the hill is part of a master plan that envisions the settlement growing from 9,000 to 30,000 residents.

Israeli officials said any new construction would require several years more of planning and stages of approval.

The outgoing government of Prime Minister Ehud Olmert has said it reserves the right to keep building in large West Bank settlement blocs it wants to annex as part of a final peace deal with the Palestinians, but that it has restricted construction elsewhere. Efrat is in one of those blocs.

The composition of Israel's next government is not clear yet, because last week's elections were inconclusive. However, right-wing parties are given a better chance to form a ruling coalition, with hard-line leader Benjamin Netanyahu at the helm.

Netanyahu supports settlement expansion and has derided peace talks with the Palestinians as a waste of time, saying he would focus instead of trying to improve the Palestinian economy. Palestinian President Mahmoud Abbas has dismissed Netanyahu's approach as a non-starter, and his aides said recently that peace talks can resume only after settlement construction is halted.

"We oppose settlement activity in principle and if the settlement activity doesn't stop, any meetings (with the Israelis) will be worthless," Abbas said Monday.

Settlement expansion is likely to create friction not only with the Palestinians, but with Obama, whose Mideast envoy, George Mitchell, has long pushed for a settlement freeze.

Still, settlements have grown steadily, including during the past year of U.S.-backed peace talks that ended without results.

Nearly 290,000 Israelis live in West Bank settlements today, or 95,000 more than in May 2001, when Mitchell led a U.S. fact-finding mission to the West Bank to find ways of ending several months of Israeli-Palestinian violence and resuming peace talks.

At the time, Mitchell called on the Palestinians to rein in militants involved in deadly bombings and shootings against Israelis, and said Israel must freeze all settlement construction.

The newly designated state land, called "Eitam Hill" by settlers, is located more than two kilometers (one mile) north of Efrat, and just east of a cluster of Palestinian towns and villages, with biblical Bethlehem at the center.

Abdel Rahman al-Haj, a Palestinian plumber from Bethlehem, said he owns 5.5 acres (2 hectares) of land between Efrat and Eitam Hill, and that intruders with bulldozers have repeatedly tried to clear a dirt road through his rocky hills since last month, in an apparent attempt to create an access road to Eitam Hill. The dirt road carved into the soil was clearly visible during a visit Monday.

Al-Haj said he filed a complaint with the Israeli police and obtained a stop-work order from Israel's Civil Administration, the branch of the Israeli military that deals with West Bank land use. Civil Administration officials had no immediate comment on the case.

Revivi, the Efrat mayor, said he was unaware of bulldozers clearing al-Haj's land. "Everything is done in accordance with what the government is allowing us to do," he said.

However, Efrat municipal engineer Moshe Ben Elisha wrote in a recent edition of the settlement's local paper, "Efraton," that " efforts are currently under way to create continuity between Olive Hill (an area of Efrat) and Eitam Hill." He did not elaborate.

Yesh Din, an Israeli human rights group involved in the case, said that over the years, Israel has assigned almost all areas designated as state land to settlements. Yesh Din said that's a violation of international law, which requires an occupying power to act for the benefit of the local population.

"Declaring these huge amounts of land as `state land,' as done by the Civil Administration, is only for expanding the settlement and not for the local Palestinian population," Yesh Din said Monday.