Prime Minister Benjamin Netanyahu has decided to postpone a vote on a controversial bill that critics say would amount to the de facto annexation of Israeli settlements surrounding Jerusalem, an official said Saturday.

The bill had been expected to be voted on by a ministerial committee on Sunday, in a move that would fast-track its progress through parliament.

But the Israeli official said on condition of anonymity that the bill needs "diplomatic preparation," declining to elaborate further.

It was a signal that Netanyahu wants to first discuss the bill with the U.S. White House, which has been seeking to restart long-stalled Israeli-Palestinian peace talks.

"The law also needs diplomatic preparation and thus will be postponed for the moment," the official said.

The bill would absorb major Israeli settlements currently in the occupied West Bank into Jerusalem by enlarging the city limits.

Its opponents argue that it is a step towards full unilateral annexation of the West Bank settlements affected -- a move that would be sure to spark international outrage.

For the vast majority of the international community, the status of Israel's settlements, built on land the Palestinians see as part of their future state, is to be decided in peace negotiations.

The bill has drawn harsh criticism from Palestinians and those hoping to salvage the two-state solution.

Settlements affected are Maale Adumim, Beitar Illit, Efrat, Givat Zeev, and the Gush Etzion settlement bloc.

Intelligence and Transportation Minister Yisrael Katz, who has pushed for the bill, says it would add an additional 150,000 people to Jerusalem's population, strengthening its Jewish majority.

Israel occupied the West Bank, including east Jerusalem, in the Six-Day War of 1967. It later annexed east Jerusalem in a move never recognized by the international community.

It sees the entire city as its indivisible capital, while the Palestinians want the eastern sector as the capital.

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