Israeli settlement building, a point of contention at the heart of the Israeli-Palestinian conflict, has come back into focus after Israel's far-right finance minister revived a plan that would divide the West Bank and cut it off from East Jerusalem.

Germany on Friday called on the Israeli government to stop settlement construction in the West Bank after Israel's far-right finance minister said work would start on a plan for thousands of home that would divide the Palestinian territory.

Finance Minister Bezalel Smotrich boasted that the construction, which is expected to receive final approval later this month, could thwart Palestinian statehood plans.