"After 40 years of waiting, this is a celebration," Ofra secretary Sami Karsenti told the Jerusalem Post Monday.
Ofra, established in the Binyamin region of the West Bank in 1975, is beyond Israel's security barrier and is considered an isolated settlement, the Post said.
Ofra is a legal settlement under Israeli law because it was approved in the 1970s even though it doesn't meet all the technical requirements, including having a master plan, the Post said. The situation is muddled further because many homes are on land that is privately owned by Palestinians. It is Israeli government policy not to approve building on private Palestinian property.
Several groups in recent years have filed petitions against homes in the settlements. The Post said the petitioners hoped that a precedent of tearing down settlement homes on private Palestinian property would be set that could apply throughout the West Bank.
Prime Minister Binyamin Netanyahu said last month he would approve new building as part of the release of 26 prisoners at the end of December, despite being urged not to do so by the United States and several European countries because of the effort to achieve a framework agreement by April.
Peace Now criticized the Civil Administration's decision concerning construction in the settlements of Ofra and Karnei Shomron, noting neither would be part of Israel in any final-status agreement with the Palestinians.
"A government that is seeking a two-state solution would not further entrench the conflict by building in the settlements, and especially in settlements that have no chance to remain under Israeli sovereignty," the organization said in a statement.