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The Israeli Knesset on Monday passed a controversial law that would legalise the expropriation of privately owned Palestinian land, which could mark the first step toward annexation of parts of the West Bank.

In a dramatic late evening vote, MPs ignored warnings from opposition centre-left lawmakers and the international community and passed second and third readings of the “Regularisation Bill”, which will legalise some 55 Jewish settler outposts built in the occupied West Bank.

International law views all settlements in the West Bank and east Jerusalem as illegal, but until now outposts were illegal in Israel too as they are built on private land on which Palestinians have claims.

Palestinian and Israeli critics of the law have described it as a land grab, and it would be viewed as a possible step toward annexation of parts of the West Bank as it would amount to the application of Israeli sovereignty in areas where the settlements are.

Earlier on Monday Nicky Mladenov, the UN’s special coordinator for the Middle East Peace Process warned that the law would “have far-reaching legal consequences for Israel and greatly diminish the prospects for Arab-Israeli peace”.

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