The plans drew both praise and protests amid efforts renew Israeli-Palestinian peace talks.
Former Defense Minister Ehud Barak approved the construction prior to the country's national elections in January, Ynetnews.com reported Thursday.
Of the 675 units, 137 are existing units that will be legalized under the new plans.
The Samaria Regional Council, where Itamar is located, issued a statement welcoming the news, Ynetnews.com said.
"Samaria has recorded an impressive 10 percent annual growth rate and provides thousands of young couples, both secular and religious, high levels of culture and education and vicinity to central Israel," the statement said.
Peace Now, the organization that monitors settlement activity, objected to the planned construction.
"[Prime Minister Binyamin] Netanyahu has decided to change the rules and ruin any chance of reviving talks. The government has become addicted to the construction of settlements that will not remain in Israel under any agreement. It will fall to Israel's citizens to pay the diplomatic and financial cost," a statement released by the organization said.