Jerusalem's mayor, Ehud Olmert, had given the Ateret Cohanim, a secretive organisation dedicated to buying Arab property in the Old City and east Jerusalem, 24 hours to tear down the shacks. They were put up illegally on Monday night to protest against the murders of two Cohanim members, allegedly by Arab nationalists.
"We wanted to give a Zionist response," said group spokeswoman Klila Harnoy. "We decided the only way left to show how we are fighting for Jerusalem and its unity is to build and that's why we went to this area."
By mid-afternoon, Hanan Porat of the National Religious Party, a pro- settlement party that is part of Prime Minister Benjamin Netanyahu's government coalition, had spoken with Mr Olmert to negotiate a compromise that would allow some of the Cohanim members to stay at the site.
Talk of a compromise smacked of a similar settlement made between the government and the Cohanim when its members took over a house in the Palestinian neighbourhood of Ras el-Amud last year. After days of confrontation with Palestinians and left-wing Israelis, a deal was reached that allowed 10 students from the organisation to stay at the site.
Palestinians fear a similar compromise will be reached this time, provoking more violence. On Tuesday, a demonstration against the shacks flared into violence when about 20 members of the Palestinian legislative council rushed from Ramallah to Jerusalem to protest against what they called a "new settlement" on the plot. By Wednesday, the violence had subsided, but Palestinians vowed to keep up the protests.
The row in the Old City erupted as Newt Gingrich, the American Speaker, was concluding a four-day tour of Israel during which he riled President Clinton's Administration by challenging US policy on the Middle East. On Tuesday, he told Israel's Knesset that Jerusalem should remain united under exclusive Israeli sovereignty.
Mr Gingrich tried to downplay differences with the White House, but his trip here has signalled anything but a unified American voice.
While Madeleine Albright, the US Secretary of State, has been pressuring Israel to withdraw from 13 per cent of the West Bank, Mr Gingrich, echoing most of the US Congress, has repeatedly said that when it comes to "security", Israel must be allowed to make decisions free of pressure.Reuse content