Settlements are considered illegal under global law and are seen as a major obstacle to peace and the so-called two state solution - the creation of an independent Palestinian state alongside Israel. Out of these, 3,066 have been given final approval and will soon be built.
They also carried banners reading "Peace with Palestine, Not War with Iran", "50 Years of Occupation; Time to Free Palestine", "Free, Free Palestine", and "Stop Israeli War Crimes, End US Tax Dollars for Israel".
Quoted by the israeli The Haarezt newspaper, Lieberman admitted that the numbers for the first half of 2017 are the highest since 1992.
The figures were similar to those published by settlement watchdog Peace Now last week.
The letter said that the Truah members are rabbis and cantors "who hold deep love for the State of Israel, and who believe that the vision of the Hebrew prophets, cited in Israel's Declaration of Independence, for a homeland committed to peace and justice, represents the most powerful guarantee of Israel's future".
"There isn't and there hasn't been a better government to take care of the Jewish settlement in Judea and Samara and to develop it", he said.
The settlement expansion, illegal under global law, is also a snub to US President Donald Trump, who had told Israel to hold back on such projects as he seeks ways to restart peace efforts.
Last month, Trump visited Israel and the Palestinian territories, meeting both Netanyahu and Palestinian president Mahmud Abbas as he seeks what he calls the "ultimate deal".
Almost 400,000 Jewish settlers are estimated to be living in the West Bank along with 2.8 million Palestinians.
As a result of the conflict, Israel occupied the Sinai, the Gaza Strip, the Golan Heights, the West Bank and East Jerusalem. Netanyahu has said he still supports a two state solution, but peace advocates say his actions show otherwise.