The Israeli government struck a deal Sunday to disband the biggest and oldest settler outpost in the West Bank and relocate its residents to a nearby hill, public radio said.
The agreement to relocate settlers from the Migron illegal outpost was negotiated by Benny Begin, a minister without portfolio in the government, the radio said.
Migron settlers will be moved to a hill two kilometres (1.2 miles) away where new homes will be built for them and the current site will be turned over to the Israeli military administration, it said.
Isral's Supreme Court had ordered the Migron outpost to be evacuated by the end of March.
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Migron, located north of Jerusalem, is built on privately owned Palestinian land.
Israel considers settlement outposts built without government approval to be illegal and often sends security personnel to demolish them, although in recent months the government has announced its intention to retroactively legalise a number of them.
More than 310,000 Israelis live in settlements in the occupied West Bank and the number is constantly growing.
Another 200,000 live in a dozen settlement neighbourhoods in east Jerusalem, which was captured by Israel in 1967 and annexed in a move never recognised by the international community.
The international community considers all settlements in territories occupied by Israel since the 1967 Middle East war are illegal, whether or not approved by its government.