By Dan Williams

JERUSALEM, Feb 23 (Reuters) - A far-right Israeli cabinet minister formally gained responsibilities over Jewish settlements in the occupied West Bank on Thursday that he said included bringing their legal status closer to that of communities within Israel.

The announcement by Finance Minister Bezalel Smotrich, who wields a supervisory role for settlers in the Defence Ministry as part of his coalition deal with Prime Minister Benjamin Netanyahu, comes amid increasing focus on Israel's policies in the West Bank from the United States.

A 14-point statement issued by Smotrich after he agreed on a division of roles with Defence Minister Yoav Gallant included the assertion that "legislation on all (settlement) civilian matters will be brought into line with Israeli law".

Asked to elaborate on that, a Smotrich spokesperson said: "Equal application of relevant laws - on labour, the environment, et cetera - that are legislated in Lesser Israel."

"Lesser Israel" is a term used by ultranationalists like Smotrich - himself a settler - who want the country to annex the West Bank, a biblical and strategic area captured in a 1967 war.

The United States has reiterated its decades-old calls for a two-state solution between Israel and the Palestinians and called for restraint after a surge in violence in the West Bank, which the Palestinians want as the core of a future state.

Washington has also urged Israel to halt further expansion of settlements, which most world powers regard as illegal.

Smotrich said he would now also have "total responsibility" over zoning, surveys and sales of West Bank lands for settlers, who number around a half million among 3.1 million Palestinians.

Confirming the Smotrich-Gallant agreement, Netanyahu said it was pursuant to the coalition deals.

Netanyahu said in 2019 that he would annex West Bank settlements - alarming the West and prompting the United Arab Emirates and Bahrain to forge ties with Israel a year later in exchange for the prime minister shelving the territorial plan.

The platform of Smotrich's Religious Zionism party calls for advancing West Bank settlement in the face of "a complex U.S. administration" by focusing dialogue on "the extent of sovereignty Israel will assert and the scale of construction and retroactive authorisation (of unsanctioned settler outposts)".

If formal annexation is not possible due to U.S. opposition, it adds, "de facto assertion of sovereignty should be pursued". (Writing by Dan Williams; Editing by Nick Macfie)