By Ori Lewis

JERUSALEM (Reuters) - An Israeli ministerial committee on Sunday defied Prime Minister Benjamin Netanyahu and voted to support a bill to allow settlers in the occupied West Bank to remain in homes built on privately owned Palestinian land.

Israel's Supreme Court had ruled the government must evacuate a few dozen families from the Amona settlement and return the land to its Palestinian owners but right-wing lawmakers want to pay them compensation instead and allow the settlers to stay.

The government has sought an extension for the end-of-year evacuation so it can find somewhere else for settlers to live, but the lawmakers who support the settlers' wish to remain, presented the bill to try to circumvent the ruling.

Israel's attorney-general, Avihai Mandelblit, said in a statement that the bill was legally flawed in its current form as it contravened private property rights legislation and did not tally with Israel's international law commitments.

"The attorney-general told the committee that the bill does not sit with the basic principles of the rule of law as it contradicts the position that the state must respect the judiciary's decisions in individual cases," Mandelblit said.

Israel has occupied the West Bank and East Jerusalem since the 1967 Middle East war. Palestinians want those territories along with the Gaza Strip for a state but peace talks have stalled since 2014.

The Palestinians see Israeli settlements as a major obstacle to reaching a peace agreement and want them dismantled.

Netanyahu had insisted on delaying any political move and told his cabinet on Sunday to allow the new administration of U.S. President-elect Donald Trump to take over in Washington before setting future policy.

Netanyahu last week expressed confidence that he and Trump could work together to bring U.S.-Israeli relations to "new heights".

The administration of President Barack Obama has been highly critical of Israel's settlement policies.

But Education Minister Naftali Bennett and Justice Minister Ayelet Shaked from the ultra-nationalist Jewish Home party, partners in Netanyahu's right-wing coalition, ignored his call to postpone the vote.

Following authorization of the private members' bill in committee, it now heads to parliament on Wednesday where it will be debated but it is still some distance from becoming law.

The committee also voted to support a bill to enforce lowering the volume of loudspeakers in mosques calling worshippers to prayer which Arab-Israeli lawmakers described as racist.

Netanyahu said the bill would improve the quality of life for all Israelis, who he said had complained to him about "excessive noise coming from houses of worship."

Nabil Abu Rdainah, a spokesman for Palestinian President Mahmoud Abbas, said that enacting both laws would force the Palestinians to appeal to international bodies.

(Additional reporting by Ali Sawafta in Ramallah; Writing by Ori Lewis; Editing by Dale Hudson)