Under the agreement, confirmed by settler leaders and therefore the interior ministry, the settlers will leave the Eviatar outpost within days but their mobile homes will remain and Israeli troops will establish a base within the area.
According to a press release from regional settler leader Yossi Dagan, the defence ministry has agreed to review land claims to assess the prospect of a future recognised settlement.
Dagan said the agreement had been approved by Prime Minister Naftali Bennett, defence minister Benny Gantz and interior minister Ayelet Shaked.
Shaked’s office confirmed the deal, but spokespersons for Bennett and Gantz weren't immediately available to comment.
About 50 Jewish families moved to Eviatar last month, erecting huts, tents and caravans - in defiance of international and Israeli law - ashore near Nablus within the occupied West Bank , which Palestinians claim for a future state.
Eviatar settler Tzvi Succot, a pacesetter within the outpost community, said he supported the agreement because he believed it might ultimately cause a permanent Jewish community.
“The most vital thing for us is that the buildings stay here, that a Jewish presence remains on this hill,” Succot told AFP.
Palestinians within the nearby community of Beita have responded with night-time protests, flashing horns, burning tyres and shining laser beams to stay the settlers awake.
Those protests continued on Monday once they directed green light beams towards Jewish settler homes and hoisted Palestinian flags.
Moussa Hamayel, the deputy head of the Beita municipality, told AFP that the Palestinian community had “completely rejected” the purported compromise.
Israeli troops have killed four Palestinians including an adolescent in unrest sparked by the protests.
Eviatar is known as after a settler fatally stabbed near Beita in 2013. Israeli authorities had evacuated an earlier version of the outpost.
But Israeli families returned in May after a Palestinian man shot dead a student nearby.
Gantz ordered the settlement removed, but Benjamin Netanyahu - who served 12 unbroken years as prime minister before he was unseated on June 13 - froze the choice .
Bennett, who ousted Netanyahu by joining a broad coalition including left-wingers and an Arab party, is that the former head of the Yesha Council, a settlers’ lobbying group.
All Jewish settlements within the West Bank , occupied by Israel since 1967, are considered illegal by most of the international community.
