Haaretz said the Defence Ministry declared nearly 250 acres (100 hectares) of territory in the Gush Etzion settlement bloc just south of Jerusalem "state land". Asked by Reuters about the report, the ministry declined immediate comment.
The land appropriation, the left-leaning newspaper said, was the largest in years and could eventually lead to the expansion of several settlements and authorisation of a settler outpost built without Israeli government permission in 2001.
The measure, which falls short of annexing the land to Israel, is based on an Israeli interpretation of an Ottoman-era law that allowed the confiscation of tracts that had not been planted or cultivated for several years in a row.
Haaretz said the heads of nearby Palestinian villages that claimed the land as theirs were informed of the move last week and have 45 days to appeal against the measure.