Hundreds of Israeli police dismantled a Palestinian protest camp on the outskirts of Jerusalem overnight, activists and police said on Sunday.

Activists set up the camp, which they dubbed Bab al-Shams or "Gate of the Sun" in Arabic, near the West Bank Israeli settlement of Maale Adumim, in a bid to draw attention to Israeli plans to boost building in the area known as E1.

Tents were pitched on Wednesday to highlight the issue ahead of a landmark three-day visit to Israel and the Palestinian territories by US President Barack Obama -- his first since taking office more than four years ago.

Palestinian legislator Mustafa Barghouti, one of the organisers, told AFP by phone on Sunday that he and four others were arrested and taken for questioning at Maale Adumim police station.

He said about 50 other protesters were put on buses and released in a Palestinian Authority-controlled part of the West Bank.

Israeli police spokesman Micky Rosenfeld told AFP that one woman was arrested for allegedly assaulting a policeman.

"Over 200 officers took part in the operation," he said. "The area was cleared in about half an hour."

The camp was first set up in January but taken down by court order on the grounds of "public disorder."

Similar encampments have sprouted elsewhere but have later been razed by troops or police.

The Palestinians say increased settlement construction in E1 would effectively cut the West Bank in two and prevent the creation of a contiguous Palestinian state.

The international community has also reacted with consternation to Israeli plans to build in E1, urging Prime Minister Benjamin Netanyahu's government to reconsider.