Israel has approved hundreds of new settlement homes in occupied East Jerusalem, following pro-Israel US President Donald Trump took office.
Jerusalem Deputy Mayor Meir Turgeman told AFP: "Now we can finally build."
Israel's PM reportedly delayed approval given the opposition of Barack Obama, who infuriated Israel by allowing a UN resolution against settlements to pass.
Settlements in East Jerusalem are considered illegal under international law, though Israel disputes this.
Israeli Prime Minister Benjamin Netanyahu said on Sunday that Mr Trump had invited him to a meeting in Washington in February, on a date yet to be decided.
A statement said the two leaders held a "very warm" telephone conversation in which they discussed issues including the Iran nuclear deal and the peace process with the Palestinians.
The White House said Mr Trump had emphasised during the call that peace between Israel and the Palestinians "could only be negotiated directly between the two parties".
It said the two leaders had agreed to continue to consult closely on regional issues including "threats posed by Iran".
Jerusalem's City Hall approved construction permits for 566 new homes in the East Jerusalem settlements of Pisgat Zeev, Ramat Shlomo and Ramot.
Mr Turgeman said: "I was told to wait until Trump takes office because he has no problem with building in Jerusalem.
"The rules of the game have changed with Donald Trump's arrival as president. We no longer have our hands tied as in the time of Barack Obama."
He said the delay was at the request of Mr Netanyahu in the wake of the 23 December UN Security Council resolution opposing Israeli settlement construction.
The US refusal to veto the resolution marked the lowest ebb of deteriorating relations between the Obama administration and the Israeli government.
Mr Obama regarded opposing new settlement homes as a key plank in pursuing a possible "two-state solution" to ending the decades-old conflict between Israelis and Palestinians.
Settlements are communities established by Israel on land occupied in the 1967 Middle East war. This includes the West Bank, East Jerusalem and the Golan Heights.
More than 500,000 Jews live in about 140 settlements built since the occupation.
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