On Thursday, Likud's Central Committee voted to build again in East Jerusalem and the West Bank once Israel's self-imposed 10-month freeze on settlement construction lifts in September.
Although Netanyahu was not present for the vote, he had earlier given his assent to the draft proposal submitted by Knesset member Danny Danon, according to the Israeli daily Haaretz.
Settlement construction in the occupied territories has been a touchstone of controversy ever since Israel conquered the region during the 1967 war and almost immediately began to rebuild former Jewish-held enclaves in Jerusalem and the West Bank. The Palestinians have sharply criticized the settlements, which expanded in scope and size after the Likud came to power under Menachem Begin in 1977, as an impediment to peace.
The Obama administration, which had pressed for the current freeze, has described the political impasse between the sides as unsustainable. Earlier this year, the White House tangled with Netanyahu when Israel announced plans to expand housing in East Jerusalem, which Palestinians want as their capital, during a visit to the country by Vice President Joe Biden.
Hoping to mend fences with Washington, Israel effectively froze new construction in Jerusalem in April. At the time, though, it wasn't clear whether the move signaled a formal moratorium or whether it was permanent.
Netanyahu, who has been under increasing pressure since the international outcry over Israel's armed intervention to stop a flotilla from reaching the Gaza Strip with supplies, is also being criticized by fellow Likud colleagues.
"It is not respectable for the chairman of the party not to show up to a central committee meeting," Haaretz quoted anonymous party sources after Netanyahu said he wouldn't make the meeting. "It doesn't look good. He announces that he won't renew the [settlement] freeze and supports bolstering the settlements, but then, in a strange move, avoids the meeting."