It brings the total number of new settlements over the past few years to 69, a new record, according to Finance Minister Betzalel Smotrich, who has pushed a settlement expansion agenda in the West Bank.
The latest ones include two that were previously evacuated during a 2005 disengagement plan.
The approval increases the number of settlements in the West Bank by nearly 50 per cent during the current government's tenure.
In 2022, there were 141 settlements across the West Bank.
After the latest approval, there are 210, according to Peace Now, an anti-settlement watchdog group.
Settlements are widely considered illegal under international law.
The approval comes as the US pushes Israel and Hamas to move ahead with the second phase of the Gaza Strip ceasefire, which took effect on October 10.
The US-brokered plan calls for a possible "pathway" to a Palestinian state, something the settlements are aimed at preventing.
The cabinet decision included a retroactive legalisation of some previously established settlement outposts or neighbourhoods of existing settlements, and the creation of settlements on land where Palestinians were removed, the finance ministry said.
Settlements can range in size from a single dwelling to a collection of high-rises.
The ministry said two of the settlements legalised in the latest approval are Kadim and Ganim, which were two of the four West Bank settlements dismantled in 2005, as part of Israel's withdrawal from the Gaza Strip.
There have been multiple attempts to resettle them after Israel's government in March 2023 repealed a 2005 act that emptied the four outposts and barred Israelis from re-entering the areas.
Israel captured the West Bank, east Jerusalem and the Gaza Strip - areas claimed by the Palestinians for a future state - in the 1967 war.
It has settled more than 500,000 Jews in the West Bank, in addition to more than 200,000 in contested east Jerusalem.
The Palestinian health ministry in Ramallah said two Palestinians, including a 16-year-old, were killed in clashes with Israel's military on Saturday night in the northern part of the West Bank.
Israel's military said a militant was shot and killed after he threw a block at troops in Qabatiya and another militant was killed after he hurled explosives at troops operating in the town of Silat al-Harithiya.
Israel's military has scaled up military operations in the West Bank since the October 7, 2023 Hamas-led attack that triggered the war in the Gaza Strip.
The top Catholic leader in the Holy Land visited the Gaza Strip's only Catholic church and celebrated a pre-Christmas Mass on Sunday that included the baptism of a baby.
Dozens of Palestinians gathered in the Holy Family Parish.
Cardinal Pierbattista Pizzaballa is on his fourth visit to the enclave since the war began and said the Christian community aims to be a "stable, solid reference point in this sea of destruction" as rebuilding slowly begins.
"It is different this time," Pizzaballa said.
"I saw the new desire for a new life."
The Holy Family compound was hit by fragments from an Israeli shell in July, killing three people in what Israel called an accident and expressed regret over.
The parish has served as a refuge for Christians and Muslims, sheltering hundreds of displaced people.
There was a mix of gratitude and grief as people at the church marked Christmas away from home.
"They welcomed us with great love and respect," said Nazih Lam'e Habashi, 78, who stays there with his family.
"This is the third holiday we are marking since the war."
"God willing, life will improve," added 67-year-old Najla Saba.
