The Israeli government on Sunday agreed to fund the creation of a hiking trail that goes through the occupied West Bank and Golan Heights, Tourism Minister Yariv Levin said.

Prime Minister Benjamin Netanyahu welcomed the decision, which he hailed as "imperative in terms of tourism potential".

Israel occupied the West Bank and seized 1,200 square kilometres (460 square miles) of the Golan Heights from Syria in the Six-Day War of 1967, in moves that have never been recognised by the international community.

"The new route will pass through the Old City of Jerusalem or Shilo (north of the West Bank), places full of Jewish history," said Levin.

Following the cabinet's funding approval, a committee made up of various ministries must now submit proposals for the project whose budget is 10 million shekels ($2.8 million, 2.4 million euros).

The existing hiking route known as the "Israel Trail", which was inaugurated in 1995, was ranked by National Geographic magazine as one of the world's top 20 hikes in 2012.

Authorities in Israel have been trying for years to attract foreign tourists to the West Bank by developing historical or religious pilgrimage sites, such as the Cave of Patriarchs in the Old City of Hebron.