Israel plans to expand Jewish settlement in the Golan Heights - captured from Syria in 1967 - has infuriating Damascus just weeks after the proposed reopening peace talks between the two states.
Isareli agriculture minister Mr Yisrael Katz, who runs the cabinet's settlement committee, said the plan aimed to underline that the Golan "is an integral part of Israel" before any negotiations for its handover demanded by Syria.
A senior official close to Prime Minister Ariel Sharon denied the plan was a "political message" to rebuff Syrian President Bashar al-Assad or prejudge dialogue on the Golan, insisting "agricultural and tourist development" was the goal.
But Damascus saw a manoeuvre to make Israel's control over the strategic plateau irreversible. "Israel is deluded that it can achieve something by relying on power and occupation" Deputy Foreign Minister Isa Daweesh said.
"Conflicts ... should be resolved under international law."
Israel's left-wing opposition described the plan as another ill-timed blow to flagging regional peace efforts, saying it would encourage Syria to keep supporting Palestinian militants fighting Israel.