The Israeli environment minister, Shalom Simhon, has given Jewish settlers permission to begin dumping industrial waste at a West Bank quarry.
Jewish settlements have been accused of polluting the West Bank
Reports say 10,000 tonnes of refuse each month will be deposited at the Kedumim quarry near Nablus.
Settlement officials told the BBC the material would be used to restore the quarry area to its original state.
Israel says Palestinian waste will also be dumped there, and that underground water supplies will not be damaged.
Correspondents say it is the first time Israel has officially decided to dump its refuse in the West Bank.
Israel says both Palestinian and Israeli communities already produce waste that requires dumping in the area.
Mr Simhon denied reports that organic waste would also be dumped at the quarry.
He said he had already warned the settlers he would close the site down if it was used for this purpose.
Palestinian planning minister Ghassan al-Khatib said he was opposed to any Israeli project in the West Bank and would investigate the matter.
An assistant to the mayor of the Kedumim settlement told the BBC that the plan was to use industrial waste - including metal, plastic, glass and stones - to restore the area to the state it was in before it was quarried.
Israeli and Palestinian environmentalists have accused Jewish settlers of polluting the West Bank.
"Site administrators are contractually obliged to serve both communities," an Israeli spokesman said.
"Additionally, it is not the first such site built in the territories, as both communities already produce waste to require similar sites.
"Also there is absolutely no danger whatsoever to underground water supplies. The environmental requirements and plans already implemented on this new site are identical to other similar facilities built in Israel."
A 2004 Friends of the Earth Middle East report found that settlers account for only 10% of the population of the West Bank, yet produce 25% of water pollution by untreated sewage.
Israel has occupied the Gaza and the West Bank, including East Jerusalem, since 1967.