Demonstrators, who had been halted by police and soldiers as they marched out of Ofakim in southern Israel, turned back on Thursday toward the town just after dawn. Jewish settler leaders said they would rest and decide what to do next.
"Given the massive (security) forces deployed here, we have taken the decision to return (to Ofakim)," settler leader Tzvi Bar Hai said.
"The struggle will continue; but we are moving back to rest."
It was the latest attempt by settlers and their supporters to thwart Prime Minister Ariel Sharon's plan to evacuate all 21 settlements in the Gaza Strip starting on 17 August in what he has called "disengagement" from conflict with Palestinians.
A rally in Ofakim on Wednesday night was followed by a march by an estimated 10,000 protesters who were stopped by thousands of police and soldiers on a road just outside the town, which lies 20km from Israel's border with Gaza.
Many of the marchers, bearing the orange standard of the main Gaza settlement bloc Gush Katif, sat on the road and chanted religious anthems as security forces looked on warily.
After hours of negotiations, an agreement was reached to end the standoff.