The 5,000 Palestinians living on the small territory separating East Jerusalem from the Israeli settlement of Ma'ale Adumim have been ordered to evacuate. The operation to destroy their homes could begin as early as Thursday, burying the possibility of a Palestinian state.

Location of E1 is significant because it is one of the last geographical links between Bethlehem and Ramallah.

The Palestinian Authority says the decision is illegal and will "destroy" the prospects for a two-state solution.