Britain, Italy, France and Germany on Thursday piled on mounting international condemnation of a major Israeli settlement project in the occupied West Bank.

The four countries said the expansion was "unacceptable" and warned that the E1 development would "undermine the prospect of the two-state solution by driving a wedge through the West Bank and harming the territorial contiguity of the Palestinian Territories."

The E1 plan was greenlit by Israel last year and would further separate East Jerusalem, occupied and annexed by Israel and predominantly inhabited by Palestinians, from the West Bank.

London, Paris, Rome and Berlin said the international community had long opposed settlement expansion and repeatedly raised its concerns with Israel – privately and publicly.

"International Law is clear that Israeli settlements in the West Bank are illegal," their joint statement said, adding that the position had been reaffirmed by the U.N. Security Council.

"Not only will they take us further from peace, but they further undermine Israel's international standing," they said.

"At a time of grave instability in the West Bank with unprecedented levels of violence by settlers against civilians, and serious restrictions on the Palestinian economy, this decision is even more concerning," the statement added.

"We urge the Government of Israel to retract these plans immediately and end its expansion of settlements in the West Bank," it added, warning businesses against bidding for the construction tenders at risk of "involving themselves in serious breaches of international law."

The U.N. Secretary-General Antonio Guterres has said the E1 plan posed an "existential threat" to a contiguous Palestinian state.

Belgian Foreign Minister Maxime Prevot called the tenders "unacceptable" on Thursday, saying the project "would seriously undermine the viability of the two-State solution."

His condemnation echoed a statement by Britain's top diplomat Ed Miliband on Wednesday demanding an end to the project and settlement expansion in the West Bank, with London summoning Israel's charge d'affaires.

Miliband said he delivered the message directly to his Israeli counterpart Gideon Saar.

The British government on Wednesday also pledged to unveil "a comprehensive set of measures" in the coming weeks, including sanctions targeting people involved in the illegal settlement expansion.

Israel heavily restricts the movement of West Bank Palestinians, who must obtain permits from authorities to travel through checkpoints to cross into East Jerusalem or Israel.

Last year, Britain and France were among 21 countries that condemned Israeli approval of the E1 project, calling it a violation of international law and urging Israel to reverse the decision.

Excluding East Jerusalem, the West Bank is home to around three million Palestinians. About 500,000 Israeli settlers also live there.