JERUSALEM (AP) ― Israel is considering annexing major West Bank settlement blocs if the Palestinians unilaterally seek world recognition of a state, an Israeli official said Tuesday ― moves that would deal a grave blow to prospects for negotiating a peace deal between the two sides.

Israel has refrained from taking such a diplomatically explosive step for four decades. The fact that it is considering doing so reflects how seriously it is concerned by the Palestinian campaign to win international recognition of a state in the absence of peacemaking.

The Palestinians launched that campaign after peace talks foundered over Israeli construction in West Bank settlements. On Tuesday, the Israeli Interior Ministry said it would decide next month whether to give final approval to build 1,500 apartments in two Jewish enclaves in east Jerusalem. Israel captured both east Jerusalem and the West Bank from Jordan in 1967.

Israel annexed east Jerusalem, home to shrines sacred to Judaism, Islam and Christianity, immediately after seizing it. But it carefully avoided annexing the West Bank, where 300,000 settlers now live among 2.5 million Palestinians.

Although it is widely assumed that under any peace deal, Israel would hold onto major settlements it has built in the past 44 years, any decision to formally annex West Bank territory would be a precedent-setting move that could increase Israel’s already considerable international isolation. The Palestinians claim all of the West Bank and east Jerusalem, in addition to the Gaza Strip, for a future state.

The government official who disclosed the possible annexation said he did not know how seriously authorities were considering the option. He said that “adopting unilateral measures is not a one-way street” and added that other options were also being considered.

These could include limiting wate r supplies beyond agreed-upon amounts and restricting Palestinian use of Israeli ports for business purposes, he said. Israeli Prime Minister Benjamin Netanyahu was aware of the moves being discussed, he added, speaking on condition of anonymity because no final decisions have been made.

Netanyahu’s office had no comment. Nimr Hamad, an aide to Palestinian president Mahmoud Abbas, said “these threats are not new. ... But we are continuing (our campaign) and are convinced our position is right.”

In a related development, the Israeli Transportation Ministry is working on a plan to build an island off the coast of Gaza, where an Palestinian-run airport and seaport would be located. Ministry spokesman Ilan Leizerovich said this would allow Israel to cut all ties with Hamas-ruled Gaza.

At present most goods and people enter and exit Gaza through Israeli land crossings.

Leizerovich said the island would be built about 4.5 kilometers off the Gaza coast and would be connected by a bridge. He said it would take about six years and cost more than $5 billion to build.

The grandiose scheme would need additional government approval, Palestinian acceptance and funding.

Although peace negotiations have taken place since Netanyahu came to power two years ago, they have been sporadic and largely mediated by the U.S. Three weeks of direct talks broke down in September over Palestinian objections to continued Israeli settlement construction.

Palestinians say they won’t talk peace with Israel unless Israel freezes all construction in both the West Bank and east Jerusalem, lands they claim along with the Hamas-ruled Gaza Strip for their hoped-for state. Israeli officials fault Palestinians for the peacemaking impasse, saying a construction moratorium should not be a condition for peacemaking, because it never was in the past.

Israeli building in east Jerusalem is especially contentious because the Palestinians want to create their future capital there. Because of the annexation, Israel does not consider the Jewish enclaves housing 200,000 Jews there to be settlements, but the rest of the international community does.

Roi Lachmanovich, a spokesman for Interior Minister Eli Yishai, said officials would decide the fate of the 1,500 new apartments on April 14. The homes would be built in two existing Jewish enclaves in east Jerusalem.

Major Western powers have not given up on the concept of a negotiated solution. But with talks deadlocked, Palestinian leaders plan on seeking international recognition of a state, with or without an agreement with Israel, at the United Nations in September.

Their campaign has received a boost from Latin American countries that have lined up in recent months to offer recognition. It hasn’t received crucial U.S. or Western European support.

Although international recognition wouldn’t immediately change the situation on the ground, it would isolate Israel and put additional pressure on it to withdraw from occupied territories.