"We shall build here thousands of housing units" and add industrial zones, Netanyahu said during a visit to the Maaleh Adumim settlement of 37,000 people.
"This place will be a part of the state of Israel," he added, speaking in Hebrew.
Netanyahu has repeatedly spoken of major blocs of West Bank settlements being absorbed into Israel in a future peace agreement with the Palestinians.
He did not specify where or when the new building at Maaleh Adumim would take place but settlement watchdog Peace Now has spoken of plans to build in the contentious area known as E1 adjacent to the settlement.
About 430,000 Israeli settlers live among 2.6 million Palestinians in the West Bank, occupied by Israel in the 1967 Six Day War.
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