Israel has dismantled a tent camp Palestinians set up during US President Barack Obama's recent visit to protest against Israeli plans to build a large West Bank settlement near Jerusalem.

Before dawn on Sunday, about 200 Israeli police officers removed some 40 demonstrators from the tent camp, said Israeli police spokesman Micky Rosenfeld.

"The settlers in E-1 will destroy the idea of an independent Palestinian state."

- Mustafa Barghouti, Palestinian legislator

Palestinian legislator Mustafa Barghouti, one of the organisers, told the AFP news agency by phone on Sunday that he and four others were arrested and taken for questioning at Maale Adumim police station.

Police said they were later released on bail.

Barghouti said about 50 other protesters were put on buses and released in a Palestinian Authority-controlled part of the West Bank.

Activists set up the camp, which they dubbed Bab al-Shams or "Gate of the Sun" in Arabic, near the West Bank Israeli settlement of Maale Adumim, in a bid to draw attention to Israeli plans to boost illegal construction in the area known as E-1.

Tents were pitched on Wednesday to highlight the issue at the start of Obama's trip to Israel and the Palestinian territories.

During his visit last week, Obama singled out the E-1 settlement as particularly problematic.

Continguous Palestinian state

The settlement of more 3,500 apartments would close in one of the last open spaces between East Jerusalem and the West Bank, territories the Palestinians want for their state along with the Gaza Strip.

The camp was first set up in January but taken down by court order on the grounds of "public disorder".

The encampment is part of a new Palestinian tactic to protest against Israeli settlement expansion.

Similar encampments have sprouted elsewhere but have been quickly razed by troops or police.

Palestinians say settlement construction in E-1 would effectively cut the West Bank in two and prevent the creation of a contiguous Palestinian state.

"The settlers in E-1 will destroy the idea of an independent Palestinian state, which will end once the West Bank is cut in two," Barghouti said.

The international community has reacted with consternation at Israeli plans to build in E-1, urging Prime Minister Binyamin Netanyahu's government to reconsider.

Israel has built dozens of settlements considered illegal under international law in the West Bank and East Jerusalem since 1967 that are now home to more than half a million Israelis.

In addition, settlers have set up dozens of unauthorised outposts to claim more war-won land.

Source: Agencies