Tenders for building in East Jerusalem had increased 38-fold, the report said
Israeli settlement construction in the occupied West Bank has nearly doubled since last year, the Israeli campaign group Peace Now has said.
In the first five months of 2008, 433 new homes were started, compared to 240 in the same period last year, it said.
The group said tenders for West Bank construction had increased fivefold.
Settlements are a crucial issue for Palestinians, who fear they will create "facts on the ground" rendering a viable Palestinian state impossible.
Under the US-sponsored peace process initiated in Annapolis last November - and the "roadmap" initiative it is based on - Israel agreed to freeze settlement activity.
Basing its findings on aerial photographs, site visits and data from the Israeli Central Bureau of Statistics, Peace Now said 1,000 new buildings, containing some 2,600 homes, were currently under construction in the settlements.
Israeli settlements on the Palestinian side of the Green Line, which marks the edge of the West Bank, are considered illegal under international law, although Israel disputes this.
The Peace Now report said that, in recent years, the trend had "accelerated" to "eliminate the Green Line" through intensive construction aimed at creating a "territorial connection" reaching into "the heart of the West Bank".
The group also said the number of tenders for construction projects in East Jerusalem had increased 38-fold to 1,761 in the period since Annapolis, compared with just 46 in the first 11 months of 2007.
The Palestinians want East Jerusalem as the capital of a future state, and are concerned that the growth of Israeli settlements around it is increasingly cutting it off from the West Bank.
The Israeli authorities - like many ordinary Israeli citizens - consider Israeli areas in East Jerusalem to be "neighbourhoods" of Jerusalem, rather than settlements, and therefore not subject to a freeze.
Israel occupied East Jerusalem in 1967 and subsequently annexed it, though the move has not been recognised by most of the international community, including the US.
US Secretary of State Condoleezza Rice, speaking during a visit to the region to push forward peace negotiations, said settlement activity was not "helpful", and said "anything that undermines confidence between the parties ought to be avoided".
Israeli Foreign Minister Tzipi Livni, who is a favourite to replace scandal-hit Prime Minister Ehud Olmert, said settlement building had been reduced "in a most dramatic way" - although she did not specify the timeframe she was referring to - and was limited to "small activities".
"Israeli government policy is not to expand settlements, it's not to build new settlements, it's not to confiscate land from Palestinians," she said.
She urged the Palestinians not to use the issue as "an excuse" to avoid talks, but also said she understood their "frustration".
Mr Olmert faces several corruption investigations and has said he will step down after internal elections in his Kadima party in September.