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An Israeli settler is suing Airbnb over its ban on occupied West Bank settlement listings, heeding the call of Israeli officials to challenge the decision.

Ma'anit Rabinovich, who advertised her settlement apartment in the Kida outpost on Airbnb, filed a lawsuit against the company at a Jerusalem court on Thursday.

She argues that the decision represents a "grave, offensive and outrageous discrimination." Her suit points to disputed territories where Airbnb continues to operate, such as Tibet and northern Cyprus, among others.

Rabinovich is suing for 15,000 shekels ($4,000) in damages.

The vacation rental company said on Monday it would take down 200 listings in Israeli settlements after coming under pressure by Palestinians and rights groups.

An evaluation by Airbnb "concluded that we should remove listings in Israeli settlements in the occupied West Bank that are at the core of the dispute between Israelis and Palestinians."

The decision prompted threats by Israel of high taxes on the site. Israel’s tourism minister encouraged Israelis to sue the company.

Israel has built over 200 settlements in the West Bank and East Jerusalem since capturing and occupying the Palestinian territories since 1967.

Around 400,000 Israelis live in West Bank settlements, which range in size from tiny hamlets to large towns. A further 200,000 live in settlements in occupied east Jerusalem.

The international community considers the settlements to be illegal and a key barrier to peace between Israelis and Palestinians.