In a report it said was based on government data obtained under a Freedom of Information Act request, the group said the housing ministry was seeking to build 55,548 units in the West Bank -- including two new settlements -- of which more than 8,300 homes would be in E1.
The housing ministry spokeswoman could not be immediately reached for comment today.
E1 and the adjacent Maaleh Adumim settlement form an Israeli buffer east of Jerusalem that the Palestinians say would divide the West Bank and badly hurt the possibility of a contiguous Palestinian state.
"For these reasons, whenever an Israeli leader tries to promote the plans in E1, the international community strongly condemns them."
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The United States, the United Nations and the European Union oppose all Israeli settlement building but have voiced particular concern about plans for E1.
In 2013, faced with international pressure, Israeli Prime Minister Benjamin Netanyahu vetoed construction of some 1,200 homes there but Peace Now said the housing ministry has hired architects to prepare fresh blueprints.
"They must be approved by the minister of defence and then go through the approval process of the planning authority," the English-language report said.
US-backed peace talks between the Palestinians and Israel collapsed in April 2014 amid bitter mutual recriminations.
A chief grievance of the Palestinians was settlement building on land they claim for a future state.
"The continued settlement growth raises honest questions about Israel's long-term intentions and will only make separating from the Palestinians much more difficult," US Secretary of State John Kerry said in a speech in Washington on December 6.
Today, some 380,000 Israelis live in 135 West Bank settlements, with another 200,000 in east Jerusalem.