The Israeli government is undermining stability in the West Bank as settler violence reaches unprecedented levels, a coalition of western countries says, as its leaders call for an end to construction of Israeli settlements it says breach international law.

In a joint statement issued on Friday, Anthony Albanese and the leaders of the UK, Italy, France, Germany, Canada, Norway, the Netherlands and New Zealand said:

“Over the past few months, the situation in the West Bank has deteriorated significantly. Settler violence is at unprecedented levels.

“The policies and practices of the Israeli government, including a further entrenchment of Israeli control, are undermining stability and prospects for a two-state solution.

“International law is clear: Israeli settlements in the West Bank are illegal.”

The statement singled out the E1 Israeli settlement project, which would connect occupied territories in East Jerusalem with another Israeli settlement in the West Bank. According to a tender published by the Israel Land Authority in January and first reported by the Guardian, the project would contain 3,401 housing units.

Israel’s far-right finance minister, Bezalel Smotrich, who is himself a settler, said when the project was approved in August last year that it would “bury” the idea of a sovereign Palestine.

“Those in the world trying to recognise a Palestinian state will get an answer from us on the ground,” he said at the time.

“Not through documents, not through decisions or declarations, but through facts. Facts of homes, neighbourhoods, roads and Jewish families building their lives.”

Smotrich and Itamar Ben-Gvir were sanctioned last June by the governments of Australia, Canada, New Zealand, Norway and the United Kingdom for inciting extremist violence and serious abuses of Palestinian human rights.

In the statement the international leaders, including those of the nations known as the E4, said:

“The E1 settlement development would divide the West Bank in two and mark a serious breach of international law.

“Businesses should not bid for construction tenders for E1 or other settlement developments. They should be aware of legal and reputational consequences of participating in settlement construction including the risk of involving themselves in serious breaches of international law.

“We call on the Government of Israel to end its expansion of settlements and administrative powers, ensure accountability for settler violence and investigate allegations against Israeli forces, respect the Hashemite custodianship over Jerusalem’s Holy Sites and the historic status quo arrangements, and lift financial restrictions on the PA and the Palestinian economy.”

The leaders also spoke out against those who supported such settlements, but did not name any Israeli government figures.

“We strongly oppose those, including members of the Israeli government, who argue for annexation and forcible displacement of the Palestinian population,” the leaders said.

“We reaffirm our unwavering commitment to a comprehensive, just and lasting peace based on a negotiated two-state solution in accordance with relevant UN Security Council resolutions where two democratic states, Israel and Palestine, live side by side in peace and security within secure and recognised borders.”

Chris Bowen, the energy minister, told reporters on Saturday that the statement did not represent a new stance by the Albanese government.

“Look, we’ve been very clear about settlements in the West Bank,” he said.

“This is not a new position for Australia. We’ve joined other countries, sure, that is new, but that is a consistent position that the government has held.”

The Israeli government did not immediately comment on the statement.

In March, a coalition of Australian civil society organisations called for the Albanese government to block the E1 settlement.

Andrew Witheford, the international and crisis campaigner at Amnesty International Australia, said at the time: “We welcome that the Government, along with 20 other countries, last year condemned Israel’s moves to illegally annex the Occupied Palestinian Territory in the West Bank.”

“The time has come to act decisively, before that annexation becomes a brutal reality.”

–with Reuters