David Chater, Al Jazeera's correspondent in the West Bank, said: "This village of 5,000 people is essentially being locked down under curfew, under a seige, as tight as anything that the Gaza Strip has experienced since last Friday.
"Palestinians have been protesting for weeks now that their land has been taken by the separation barrier."
Chater explained that the barrier was built to protect six Israeli settlements.
"Since last Friday, 35 people had been injured from rubber bullets and 100 from tear gas fired at the villages directly into their houses and the local medical centre has been running out of supplies," he said.
Jamal Gomaa, director of Stop the Wall organisation, told Al Jazeera that the Palestinian people were merely trying to protect their land, but had been met with severe force.
"The soldiers have been coming for days, claiming that they want to let bulldozers do their work. What do they expect the Palestinian people to do? They have the legitimate right to defend themselves and their land.
"Israel should stop hiding behind what they call 'security'. What they are doing is ghettoising the Palestinian people, separating the people and their land."
The Israeli spokeswoman said security forces had been attacked by hundreds of Palestinians who pelted them with rocks and rolled burning tyres at them, injuring a border policeman.
She denied that the closure was affecting the movement of sick Palestinians, but Salah al-Khawaja, a spokesman for the Ni'lin Committee for Resisting the Wall, said that "casualties and other patients were prevented from leaving the village for treatment".
'Closed military zone'
Israel's blockade involved declaring the construction site a "closed military zone," a sweeping measure that did not appear to provide access to the area for any peaceful demonstrators.
|Residents have confronted Israeli soldiers to protect their land [AFP]
It says the barrier is intended to keep out Palestinian suicide bombers, but it also loops around Jewish settlement blocs, cutting off some West Bank villages from their farmland.
Construction sites are flashpoints for confrontations between Israeli security forces and Palestinians, who are often supported by left-wing protesters from Israel and abroad.
Ni'lin residents said the closure was imposed on Friday, which also saw a march against the barrier during which at least 20 protesters were hurt by rubber bullets fired by Israeli security forces.
Gomaa said that Israeli soldiers were threatening anyone who went onto to the streets with live bullets.
A demonstration was held on Saturday in defiance of the closure, with Ni'lin youths blockading roads used by bulldozers to access the construction site, residents said.
Four protesters from an Israeli solidarity group were arrested during the demonstration, an organiser said.
Israel Radio said the closure would be reviewed by Tuesday.
Gomaa said: "The case of Ni'lin is a unique case of resistance.
"The people go to protect their land at every minute of the day, and it's something the Israelis don't want. They don't want this kind of resistance to spread to other villages."