According to colonist leader Avner Shimoni on Monday, settlers were determined to stay at a site they have named Tal Yam - opposite the Gush Katif settlement.
"A tent encampment has been set up," he told Israel Radio. He did not say how many settlers had moved in but vowed to resist Israel's planned Gaza disengagement in August.
Ten Israeli civilians and 10 soldiers were injured in scuffles at the site on Sunday, when the troops came to bulldoze some old buildings, suspecting they would be used as an outpost by Jewish extremists planning to fight the planned pullout from occupied territory.
The confrontation has stoked fears of major confrontations when Israel tries to remove all 21 unlawful Jewish settlements in Gaza and four in the northern West Bank under Prime Minister Ariel Sharon's plan.
But Aljazeera correspondent in the occupied territories, Wael al-Dahduh, pointing out that settlers have previously organised similar protests, said all indications were that the incident would not block the Israeli pullout from Gaza.
The scuffles came just hours after an interfaith dialogue was televised by CBS from Jerusalem, attended by an Israeli rabbi, a Muslim scholar and an Arab Christian bishop.
A Palestinian refugee from the village of Dimra that ceased to exist after 1948, Muslim scholar Imad Faluji, told journalists the dialogue should not be taken for granted.
"We believe our blood is the same colour, our tears are as bitter, and our pain as deep"
Audience member at interfaith dialogue in Jerusalem
"What Israel does on the ground makes it more difficult for us to start this dialogue ... but I came so I could speak about the problems," he said. "We can solve all the problems through dialogue."
The rabbi participating in the discussion was David Rosen, international director of inter-religious affairs for the American Jewish Committee, who was also joined by the Reverend Rih Abu al-Assal, the Anglican Church's Jerusalem bishop.
Many in the audience urged Palestinians and Israelis to make a just peace, with one audience member - whose daughter was killed in 1997 - adding: "We believe our blood is the same colour, our tears are as bitter, and our pain as deep."
The event was sponsored by A Different Future, a group aimed at showing the world the moderate Israeli and Arab voices that often are not heard in the media.