Palestinians have said the law was a means to 'legalise theft' and France called it an 'attack on the two-state solution'
Israel's Supreme Court has frozen implementation of a law legalising dozens of Jewish settlements built on private Palestinian land, which the UN labelled a "thick red line".
Court documents seen by AFP on Friday show that Judge Neal Hendel issued on Thursday an open-ended restraining order suspending a bill passed by parliament that would retroactively legalise a number of outposts across the occupied West Bank.
The decision was in response to a petition brought by 17 Palestinian local councils on whose land the settlements are built.
Israeli and Palestinian rights groups were also parties to the petition.
Hendel wrote in his decision that Attorney General Avichai Mandelblit had asked him to grant the order.
It did not specify a time limit but demanded that Israel's parliament, the Knesset, deliver its response by 10 September and that Mandelblit submit an opinion by 16 October.
The act, known as the "legalisation law", was passed in February and brought immediate condemnation from around the world.
International law considers all settlements to be illegal, but Israel distinguishes between those it sanctions and those it does not - so-called outposts.
Mandelblit himself warned the government the law could be unconstitutional and risked exposing Israel to international prosecution for war crimes.
UN envoy for the Middle East peace process Nickolay Mladenov said following the February Knesset vote the bill set a "very dangerous precedent."
"This is the first time the Israeli Knesset legislates in the occupied Palestinian lands and particularly on property issues," he told AFP at the time.
"That crosses a very thick red line."
The act allows Israel to appropriate Palestinian private land on which settlers built without knowing it was private property or because the state allowed them to do so.
Palestinian landowners whose property was taken for settlers would be compensated with cash or given alternative plots.
Palestinians said the law was a means to "legalise theft" and France called it a "new attack on the two-state solution".
Some members of Prime Minister Benjamin Netanyahu's right-wing government advocate the annexation of much of the West Bank, a move that would end any hope of an independent Palestinian state.
Mladenov said that the "legalisation law" could be a prelude to that.
"It opens the potential for the full annexation of the West Bank and therefore undermines substantially the two-state solution," he said after its passing.
Some right-wingers criticised the court decision, saying it undermined the sovereignty of Israel's parliament.
"This is a dangerous intervention by the court against Knesset legislation," said MP Bezalel Smotrich of the Jewish Home party, which is part of Netanyahu's coalition government.
"Time after time the judiciary tramples on the decisions of one governmental authority or another. This story must stop."