http://www.bbc.co.uk/news/world-middle-east-20985105
Activists erected about 20 large tents on the patch of land known as E1, between Jerusalem and the Jewish settlement of Maale Adumim.
Israeli plans to build in the area drew sharp criticism by members of the international community in December.
Palestinians say that building in E1 would jeopardise the contiguity of a Palestinian state.
Jewish settlements in the West Bank are considered illegal under international law, though Israel disputes this.
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