Jewish Settlements have existed from time immemorial in the West Bank (Judea and Samaria) and the Gaza Strip. They were recognized as legitimate the Mandate for Palestine and adopted by The League of Nations. Hebron existed throughout the centuries of Ottoman rule as a Jewish settlement. Others were established under the British Mandatory Administration before the State of Israel was created in 1948. Many of these newer settlements were on land that was originally a Jewish community in previous generations. Jewish people have deep historic and religious connections with this land.
For more than a thousand years we have not been prohibited from these settlements until the new state of Jordan was created and their illegal occupation administration from 1948 to 1967 declared the sale of land to Jews as a capital offense. The rights of Jews in these areas and the legal titles to the land that they had could not be legally invalidated by either Jordan or Egyptian occupation when they invaded Israel in 1948. These rights and titles are valid to this day.
The West Bank and Gaza Strip is territory where there are competing claims which should be settled in peace process negotiations. Israel has valid claims to title in this territory based on historic and religious connection to the land and security needs, and also that the territory was not under the sovereignty of any state and came under Israeli control in a war of self-defense. Israel understands that the Palestinians also think they have legitimate claims on the area.
There had been no prohibition whatsoever on the building or expansion of settlements up until the Annapolis Peace Conference. Earlier, the agreements said that this was reserved for permanent status negotiations which would take place in the ending stages of peace talks. It was agreed that Palestinians had no jurisdiction or control over the settlements or Israelis until the conclusion of a permanent status agreement. Are we there? Where are our peaceful partners?
The building of homes has no effect on the status of the area. Many Israeli governments so far have recognized the need for compromise and have voluntarily adopted a freeze on the building of new settlements. Sharon had declared Israel would not build any new settlements but was committed to the existing settlements' needs.
Israel was originally promised at least 4/5th more the size of a piece of land that they received in 1948, but it didn't create a war about it. It was accepted. Since then, chunks have continually been bitten off and this is continuing. We are left with a microscopic bite, and an odd shape at that that can't be adequately protected. What will happen to this little piece? Will it be swallowed whole by the Palestinians?
Reference: Jewish Virtual Library May 2001: Israeli Settlements and International Law