Israel’s defence and finance ministers announced plans for three illegal settlements in Gaza and more than $400m (£300m) in funding to expand construction in the occupied West Bank, as Israel’s military commander for the region celebrated violent outposts as his “security partners”.

With national elections scheduled for 27 October, Benjamin Netanyahu’s far-right coalition is racing to expand control of land in occupied Palestine and drive out Palestinians before its mandate expires.

The defence minister, Israel Katz, said he intended to set up three “Nahal” outposts in northern Gaza, a type of military community that for decades has paved the way for Israeli civilian settlements.

The finance minister, Bezalel Smotrich, announced 1.3bn shekels (£318m) in funding for dozens of new Israeli settlements in the occupied West Bank. The cabinet allocated the money last month but kept the decision secret because of expected US opposition, Israeli media reported.

Maj Gen Avi Bluth, who commands Israeli forces in the West Bank, told residents of extremist outposts that he “appreciates their work” and considered them to be partners in security with the military.

Bluth, who grew up in a West Bank settlement himself, spoke on Wednesday at a meeting of the euphemistically named Farms Association, which represents settlements that are illegal even under Israeli law.

These play a key role in campaigns of terror that have driven Palestinians from their homes and lands across the occupied West Bank.

Dozens from Israel’s political and military elite, including two former prime ministers and former heads of all its security services, have threatened legal action against their government over support for Jewish terrorism in the West Bank.

“Settler violence is state violence,” the UN human rights office for Palestine said in a new report published this week that detailed how Israel used settlers to lead annexation efforts, while systematic impunity for perpetrators ensured violence could grow unchecked.

Hagit Ofran, from the Israeli activist group Peace Now, said bulldozers were working on at least seven settlements that would be populated before polling day. “The government is on a reckless pre-election sprint to raid the public purse in order to create facts on the ground,” Ofran said.

Katz outlined his settlement plans for Gaza during a visit to Israeli-controlled parts of the territory. He has also pushed for the ethnic cleansing of Gaza through the large-scale migration of Palestinians. “I intend to establish three Nahal outposts, which is also a military entity, in those places that were [Israeli settlements] in northern Gaza,” he told Channel 14 TV.

Nahal outposts were not intended for military use in the long term, said Dror Etkes, the founder of the advocacy group Kerem Navot, which monitors Israel’s land grab in the occupied West Bank. “The military is only the first phase, which aims to prepare it for future settlement,” he said. “All together, dozens of Israeli settlements in the West Bank were established in this way.”

Nahal settlements were first established in border regions in the 1950s, including surrounding the Gaza Strip, Etkes said. From 1967, the same system was used in the occupied West Bank, initially along the Jordan valley and then spreading to other areas.

Smotrich also said last month that plans for three settlements in Gaza were complete and work could begin as soon as Netanyahu gave a green light. The prime minister’s office did not respond to requests for comment on Katz’s plans.

Katz also told Channel 14 that he “felt good” seeing the wasteland of rubble that had replaced Palestinian homes and communities in most of Israeli-occupied Gaza.

Israel now controls 65% of Gaza, Israel’s deputy chief of staff, Maj Gen Tamir Yadai, told Katz in an on-camera briefing. This is far beyond the 53% agreed under the ceasefire brokered last year by the US president, Donald Trump.

About 2 million Palestinians who survived Israel’s war of annihilation are crowded into the remaining third of Gaza’s territory.

“I don’t know how to describe this, other than victory, when you control 65% of the territory, when you have killed over 70,000 terrorists here,” Yadai said.

His figures appeared to label 21,000 Palestinian children killed by Israeli attacks as “terrorists”, including more than 1,000 babies who never reached their first birthday.

Israel’s military has recognised that a database of Gaza’s war dead compiled by Palestinian health authorities is broadly accurate. It contains more than 73,000 people listed by name, with their Israeli-issued ID number.

More than 21,000 were children; more than 10,000 were women under 60 years old, and more than 5,000 were elderly people. Asked whether Yadai’s data counted women, children and elderly people as “terrorists”, the Israeli military declined to comment directly.

A spokesperson said the military was still assessing casualty numbers in Gaza, and despite Yadai’s comments to Katz, had not briefed civilian officials on this issue.

“The IDF is currently conducting a staff assessment regarding the breakdown and categorisation of its casualties. The process has not yet been completed and has not been presented to the political echelon,” the spokesperson said.

The spokesperson declined to comment on Bluth’s backing for settler militants and said decisions on settlements were a political issue.