He said that the partial re-routing had effectively frozen the settlement's expansion.
"This [is] the visible success, more than to change the route of the wall - if the route stays as it is now, this means another 1,500 apartments will be built ... but with the new route this means that plan will [be] cancelled."
Israel began rerouting the Bilin section of the barrier on Thursday, two and a half years after Israel's supreme court ruled that the barrier must be moved.
Workers laid down tracks for the new route and, once the new section is built, the part of the barrier currently standing around Bilin will reportedly be removed.
That will return about 700,000 square metres to the Palestinian side of the wall.
Israeli defence officials confirmed preliminary work was being done but did not provide details.
Israel began building the separation barrier in 2002 after a spate of deadly Palestinian attacks on Israelis.
The separation barrier cuts into the West Bank, away from the so-called Green Line which marks the ceasefire line agreed at the end of the 1948-49 war that followed the creation of Israel.
Activists say that in total 84 per cent of the barrier will be in the West Bank, often separating Palestinians from their farmland.
Sherine Tadros, Al Jazeera's correspondent, reporting from Bilin, said: "For Palestinians, it's simply a land grab - a way to demarcate Israel from the West Bank and take more Palestinian land and pre-empt a final settlement."
In late 2007, Israel's supreme court ordered the government to modify the barrier's route through Bilin, dismissing its argument that the current route was necessary to protect residents of Jewish settlements.
The judges ordered the government to come up with a new route in a "reasonable period of time".
Protesters have gathered every Friday in the village for the past five years to protest against the barrier, often leading to clashes with Israeli security forces.
Soldiers have fired tear gas, stun grenades and live rounds to disperse the demonstrations, saying that the protests are illegal.
Hundreds of Palestinian, Israeli and foreign demonstrators have been injured in the clashes over the years and one Palestinian protester was killed.