The move to seize the land, in the Bethlehem area in the south of the territory, is the biggest of its kind in three decades, Peace Now said.
"On the instructions of the political echelon... 4,000 dunams at Gevaot (settlement) is declared as state land," said the army department charged with administering civil affairs in occupied territory, laying down a 45-day period for any appeal.
It said the move stemmed from political decisions taken after the June killing of three Israeli teenagers snatched from a roadside in the same area, known to Israelis as the Gush Etzion settlement bloc.
The Etzion settlements council welcomed today's announcement and said it was the prelude to the expansion of the current Gevaot settlement.
It "paves the way for the new city of Gevaot", it said in a statement.
"The goal of the murderers of those three youths was to sow fear among us, to disrupt our daily lives and to call into doubt our right to the land," it said. "Our response is to strengthen settlement."
The existing settlement of Gevaot consists of only 10 families.
In an angry reaction to the announcement, chief Palestinian negotiator Saeb Erakat called for diplomatic action against Israel.
"The Israeli government is committing various crimes against the Palestinian people and their occupied land," he said.
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