David Keyes, spokesman for Israeli Prime Minister Benjamin Netanyahu, says the funds were approved today.
A statement from Netanyahu's office says the funding aims to assist small businesses, encourage tourism and strengthen security. It follows months of Palestinian attacks on civilians and soldiers.
Some 600,000 Jews live in settlements built on the West Bank and in east Jerusalem on lands Israel captured from Jordan in the 1967 war. Most of the world considers them to be illegal. Israel has faced strong criticism for their continued expansion.