The vast expansion in building over the 1967 Green Line – viewed as illegal by the international community – comes after the announcement of thousands more homes in East Jerusalem and the West Bank in the last week.
The bold new policy approach has come into effect since US President Donald Trump – who is sympathetic to Israeli interests – took office last week.
The planned permits had been previously held up until the end of former President Barack Obama’s tenure, said Meir Turgeman, chair of the city hall’s planning and building committee, on Thursday. Mr Obama’s administration was critical of Israeli settlements, warning that such construction was chipping away at hopes for a two-state solution.
The additional 153 buildings will be located in Gilo, an established settlement neighbourhood. The move comes after 566 new settler housing units were announced last Sunday.
Separately, Israel’s Defence Ministry announced on Monday a planned 2,500 homes in the West Bank.
Both the United Nations and the European Union condemned the accelerated settlement expansion initiatives earlier this week.
The Palestine Liberation Organisation has demanded international action on the major expansions, saying in a statement it believed the Israeli moves came as a result of “what they consider encouragement by American President Donald Trump.”
The incoming Trump administration has struck a much less critical tone towards Israel than his predecessor.
Mr Trump spoke with Isareli Prime Minister Benjamin Netanyahu on Sunday in what was described as a “very warm” conversation.
His pick for ambassador to the country, David Friedman, is strongly pro-settlements.
Since the 1970s successive Israeli governments have encouraged large numbers of Jews to move onto what is viewed internationally as occupied land.
The total settler population in the West Bank is now thought to be 550,000 strong.
Settlement building, which has increased year-on-year under the right-wing Mr Netanyahu, is viewed as one of the major stumbling blocks to a lasting peace deal in the long-standing Israeli-Palestinian conflict.
Mr Netanyahu says the Palestinian failure to recognise Israel as a Jewish state is the biggest obstacle to peace, rather than settlements.
News agencies contributed to this report