When a voice crackled from speakers on the cold and rainy West Bank hilltop finally announcing a deal, hundreds of young Jewish protesters who had camped out reluctantly started to leave.

The youths with dangling sidelocks and knitted skullcaps were suspending their campaign following Sunday's agreement, but the power of their cause had already been made clear.

A long-running drama over the future of the small Jewish outpost of Amona in the occupied Palestinian territory, where the youths were protesting, has rocked Israeli politics and demonstrated the influence of the country's far-right.

Though only 40 families live in mainly caravan homes on the hilltop, Prime Minister Benjamin Netanyahu's government found itself tied in knots over how to remove them before a court-ordered December 25 deadline, resulting in Sunday's deal.

The controversy has led to a wider debate over the future of the West Bank and of a two-state solution to the Israeli-Palestinian conflict, long the focus of peace efforts but a possibility many now see as fading.

Religious nationalists in Netanyahu's coalition used Amona to push for the legalisation of several thousand other Israeli settler homes in the West Bank -- a measure that may yet pass.

Some analysts see the argument as gaining more traction than ever, particularly with Donald Trump taking office as US president in January.

"I believe that we are witnessing now a slow but clear move from both ends of the political rainbow toward serious consideration of the possibility of annexation of some of the (Palestinian) territories," Yedidia Stern of The Israel Democracy Institute think-tank told AFP.

'Protect the land'

Israeli settlements are seen as major stumbling blocks to peace efforts as they are built on land the Palestinians see as part of a future state of their own.

All are considered illegal under international law, but Israel differentiates between those it has approved and those it has not.

Settlements such as Amona are called outposts -- those that Israel has not approved.

While it may seem unlikely that 40 families on a hilltop could wield such heavy influence, Amona became symbolic.

Netanyahu was forced to move carefully even though the outpost was under the high court order to be evacuated because it was found to have been built on private Palestinian land.

The settlers were refusing to leave, while their supporters from within and outside the government rushed to their defence.

In 2006, the demolition of nine permanent houses in the same outpost led to clashes, and Netanyahu was eager to avoid violence this time.

When the residents rejected a government proposal last week that would have moved 12 of the families to a nearby plot, several hundred hardline youths filed into Amona to head off a feared imminent forced evacuation.

By Sunday, they had drilled and welded fortifications inside Amona's synagogue, with metal rods and chains put in place.

Vowing to peacefully resist, they slept on the floor inside the synagogue, in residents' homes and in cars.

Some took up positions on top of a water tower, while others at one point blocked roads with debris and scattered nails on the tarmac.

"We came to protect the land, to show that we won't give up without a fight," a protester in a black skullcap who declined to give his name said at the synagogue before dawn Sunday.

"After God gave us this land, we cannot give it up to the Arabs," said the young man.

At one point Sunday, youths shouted down Housing Minister Yoav Galant and blocked his car.

'Did the impossible'

A new offer was made to the residents after an all-night negotiating session that would move 24 families to a nearby plot.

Each family was also offered up to 200,000 shekels (50,000 euros, $52,000) in compensation, according to Israeli media reports, though Amona residents have not confirmed it.

Following hours of debate and a vote, they accepted, potentially ending the threat of a forced evacuation, though legal hurdles remain.

However, Israeli leaders may now face a bigger controversy.

As part of negotiations over Amona, Education Minister Naftali Bennett put forward a bill that would legalise some 4,000 West Bank settler homes built on private Palestinian land.

The bill has been approved by parliament in a first reading and requires two more.

Attorney General Avichai Mandelblit has warned it could subject Israeli officials to prosecution at the International Criminal Court, but there has been little sign that it will be abandoned.

Bennett, from the hardline Jewish Home party, favours annexing most of the West Bank and has made no secret of his opposition to a Palestinian state.

Such religious nationalists point to the Jewish connection to the land from biblical times.

Netanyahu, for his part, faces the task of holding together his right-wing coalition and avoiding being seen as opposing the settler movement.

Eli Greenberg, a spokesman for Amona residents, said the outpost's resistance had allowed the cause of settlement building to move forward.

Speaking last week on the front deck of his mobile home overlooking a hillside, Greenberg said: "We did the impossible.

"Amona people took the stars down to earth."