Palestinian activists on Friday began setting up an "outpost" in E1, a strip of West Bank land east of Jerusalem where Israel said it would build thousands of new settler homes.

"We have set up 20 tents, and have enough equipment to stay here for a long time," said Abir Kopty, spokeswoman for the Popular Struggle Coordination Committee.

Kopty told AFP that more than 200 Palestinians were camping at the site which they had named Bab al-Shams, or 'gate of the sun,' which is located in a corridor of land between the edge of annexed east Jerusalem and Maaleh Adumim settlement.

"We are willing to stay here until we ensure the right of the (Palestinian) owners of the land to build on their lands," she said.

"This is a message that we will not remain silent anymore in the face of settlement expansion."

E1 falls within Area C of the West Bank which is under full Israeli civilian and security control and where Palestinians find it almost impossible to obtain building permits.

The move represents a twist on a tactic used by Jewish settlers who have frequently established new settlement outposts overnight by setting up camp on hilltops across the West Bank.

Six weeks ago, Israel announced plans to build thousands of settler homes in the largely uninhabited E1 area, in a move which sparked a global outcry.

The Palestinians bitterly oppose the E1 project, which experts say could largely cut off the northern West Bank from the south and hamper access to Jerusalem, making the creation of a viable Palestinian state highly problematic.

A spokesman for the Civil Administration, the defence ministry unit responsible for planning in Area C, said he was unfamiliar with the incident, but that it "sounded like a provocation."

"If it indeed is a construction violation, we will deal with it," he added.