Israeli Prime Minister Naftali Bennett has announced a deal for Jewish settlers to leave an illegal outpost in the occupied West Bank by Friday, with a possibility of returning. 

Settlers had built the Eviatar outpost near Nablus over recent weeks in defiance of both international and Israeli law, sparking fierce protests from Palestinians in neighbouring villages. 

Bennett, who previously led a key settler lobbying group, on late Wednesday released details of the deal, which calls for Eviatar's inhabitants to leave by 4:00 pm Friday (1300 GMT).

A letter outlining the terms of the previously reported arrangement confirmed that the settler's homes will remain at the site and the Israeli army -- which has occupied the West Bank since 1967 -- will establish a presence in the area. 

Following the evacuation, the defence ministry "will perform a process of land survey on the site as quickly as possible" to determine whether it can be labelled Israeli state land, the letter said. 

If the study declares it to be Israeli land, "a religious institution will be allowed to be built and accompanying residential quarters for it and for the yeshiva staff's families," the letter added.  

All Jewish settlements in the West Bank are considered illegal by most of the international community. 

Palestinians in the nearby village of Beita, who claim Eviatar was built on their land, have categorically rejected any compromise other than a permanent evacuation of the settlers.

Four Palestinians have been killed by Israeli troops in clashes over Eviatar, which lies near the Palestinian city of Nablus and close to several other settlements.

The fracas has stirred tensions within Israel's new, ideologically divided coalition government, which includes right-wing settler supporters like Bennett, centrists, dovish parties nominally opposed to settlement expansion, and a conservative Arab party.

Anti-settlement group Peace Now blasted the Eviatar arrangement. 

"Politically, this agreement means that the new government doesn't want to confront even a small (albeit loud and forceful) minority," the group said in a statement. 

"Settlers can still do as they please."