New Delhi, Jan. 7 -- Israel has cleared the final hurdle before starting construction on a contentious settlement project near Jerusalem that would effectively cut the West Bank in two, according to a government tender.

The tender, which seeks bids from developers, would clear the way to begin construction of the E1 project.

The anti-settlement monitoring group Peace Now first reported the tender. Yoni Mizrahi, who runs the group's settlement watch division, said initial work could begin within the month.

Settlement development in E1, an open tract of land east of Jerusalem, has been under consideration for more than two decades, but was frozen due to U.S. pressure during previous administrations.

The international community overwhelm...