United States Secretary of State Mike Pompeo plans to visit Israel next week, a source said, a sign that he is weighing in on a territorial issue that has been a centrepiece of Prime Minister Benjamin Netanyahu's coalition-building efforts.

Netanyahu wants to ally with political rival Benny Gantz and start cabinet discussions on July 1 about declaring Israeli sovereignty over settlements and the strategically key Jordan Valley in the West Bank. The unity government deal has been contested in Israel's top court. Fresh construction for the settlement of Efrat was approved on land that could accommodate around 7,000 housing units, Defence Minister Naftali Bennett's office said on Wednesday.