The Israeli cabinet has voted to confer university status on a college in a settlement in the occupied West Bank.
The vast Ariel settlement is one Israel intends to keep after any peace deal
Thirteen ministers voted for the proposal to upgrade the College of Judea and Samaria in the Ariel settlement, while seven voted against.
Israeli radio said Education Minister Limor Livnat had proposed the move as a response to a British academic boycott of Bar Ilan university.
The boycott targeted Bar Ilan because of its ties to the college.
Established in 1978
In 1998 the Israeli government granted official city status to Ariel
Linked to Tel Aviv by four-lane motorway
7,000 students at College of Judea and Samaria
The Israeli government had initially responded to the boycott by the Association of University Teachers, Britain's largest university teachers' union, by denouncing it as a "biased and iniquitous decision".
Several ministers from the Labor Party voted against the move, with one, Shalom Simhon, saying it unnecessarily introduced politics into higher education.
Correspondents say the immediate impact of the upgrade is largely symbolic.
A spokeswoman for the education ministry said the change in status did not mean that the college in Ariel would receive any extra funding in the short term.
Israeli Prime Minister Ariel Sharon told his ministers that the decision was "in keeping with the government's aim of strengthening settlement blocs", according to a statement released by his office.
Mr Sharon has repeatedly stated that he wants to keep significant areas of the West Bank as part of any peace deal with the Palestinians.
The Palestinians claim all of the West Bank and Gaza for a future state and want to see all settlements removed.
The international community considers all settlements in Gaza and the West Bank, including East Jerusalem, as illegal under international law, though Israel disputes this.
About 400,000 Jewish settlers live in Gaza and the West Bank, including East Jerusalem - alongside more than four million Palestinians.
Israel has occupied Gaza and the West Bank since 1967.