An Israeli government-backed exploratory panel says settlements in the West Bank are not illegal, and that their construction does not go against relevant international rulings.

The stance cuts against much of world opinion, which considers Israelis as occupiers in disputed territories gained as a result of the 1967 war, much of which the Palestinians want for a future state.

"According to international law, Israelis have a legal right to settle all of Judea and Samaria (the biblical term for the West Bank), at the very least the lands that Israel controls under agreements with the Palestinian (National) Authority," former Supreme Court Justice Edmond Levy said in his recommendations to Prime Minister Benjamin Netanyahu.

"Therefore, the establishment of Jewish settlements (in the West Bank) is, in itself, not illegal," Levy wrote.

The inter-ministerial committee, who on Tuesday tendered its recommendations to Attorney-General Yehuda Weinstein, was set up to investigate the specific legal status of areas not claimed as privately owned Palestinian land, according to the Israel Hayom daily.

The committee's creation was prompted by a legal and political imbroglio over the Ulpana neighborhood, built on the outskirts of the Beit El settlement near Ramallah in the West Bank, of which five buildings the Supreme Court ruled were illegally built on private Palestinian land a decade ago.

Despite government attempts to postpone the neighborhood's demolition, the court denied appeals to delay the razing, but rather approved relocating the buildings instead of demolishing them.

By July 1, the 33 families who resided in the buildings in question peacefully moved to modular homes nearby until the relocation of their apartment buildings is completed.

Along with appointing the committee, the government, in compensation, also promised to build some 850 apartments in a number of communities throughout the West Bank, starting with 300 units in Bet El.

However, in response to the decision, the United States in June reiterated it's long-standing opposition to such construction, saying that continued settlement building in the West Bank undercuts negotiations with the Palestinians and contradicts existing agreements.

"We're very clear that continued Israeli settlement activity in the West Bank undermines peace efforts and contradicts Israeli commitments and obligations, including the 2003 road map," State Department spokesman Mark Toner said, in response to the Bet El announcement.

The 2003 road map, initiated by the Quartet of Middle East peace negotiators - the United States, the European Union, the United Nations and Russia - called on the Palestinians to renounce violence and Israel to dismantle all outposts erected since March 2001 and freeze all construction in other settlements.

"You know, our position on settlements remains unchanged. We do not accept the legitimacy of continued Israeli settlement activity, " Toner told reporters.

However, Levy went on to say that "...upon completing the committee's tasks, and considering the testimonies heard, the basic conclusion is that from an international law perspective, the laws of 'occupation' do not apply to the unique historic and legal circumstances surrounding Israel's decades-long presence in Judea and Samaria," the document read.

"Likewise," the report said, "the Fourth Geneva Convention ( relative to the Protection of Civilian Persons in Time of War) on the transfer of populations does not apply, and wasn't intended to apply to communities such as those established by Israel in Judea and Samaria," according to the report's authors.

But Levy took a more critical tack towards "wildcat" outposts erected without proper permits a distance away from the larger village, but still within the community's municipal land use plan.

"...dozens of new neighborhoods have been erected, without government authorization and at times without a contiguous link to the mother community. Several were built outside the legal jurisdiction allotted to the community," Levy wrote.

"This prevalent phenomenon has required large amounts of funding therefore the committee finds it hard to believe that it was done without the government's knowledge," he said.

Saying that such actions do not "befit a country that upholds the rule of law," Levy stressed that "it must be made very clear to the proponents of the settlement enterprise and to the political echelon that they are to operate only within the confines of the law, and the various law enforcement institutions must decisively enforce the law in the future."