The Palestinians are set to ask the UN Security Council to condemn Israeli settlement construction, according to a copy of a draft resolution obtained by the AP news agency.
The move reflects growing Palestinian discontent with stalled US efforts to broker a peace agreement, and is part of a campaign to put international pressure on Israel.
American reaction to the plan has been muted, raising the likelihood that the country would use its veto power in the council to defeat the resolution. Israel has angrily rejected the proposal.
American-mediated peace talks between Israel and the Palestinians have been stalled for more than three months, in large part due to disagreements over Israeli settlement construction in the West Bank and East Jerusalem, lands claimed by the Palestinians.
Saeb Erekat, the chief Palestinian negotiator, has said that the Palestinians' Arab allies will present the resolution to the Security Council early next month.
The 15-member body has condemned settlement constructions several times in the past, but has stopped short of the kind of language used in the draft resolution, which asks the Security Council to declare that settlements are "illegal and constitute a major obstacle to the achievement of peace".
The draft, dated December 21, calls for a complete halt to all Israeli construction in the West Bank and East Jerusalem.
It also urges Israel and the Palestinians "to continue, in the interest of the promotion of peace and security, with their negotiations on the final status issues in the Middle East peace process" and calls for an "intensification" of international diplomatic efforts.