For nearly three decades this outpost in the desert hills of the Jordan Valley functioned as a stillborn settlement, a temporary respite for soldiers and religious students, but never the residential community intended by Israel when it approved Maskiyot in the 1980s.

After Israel's Defense Ministry recently approved plans to build 20 houses, Palestinians and peace process proponents warn that the settlement is a de facto violation of Israel's promise not to establish new settlements in the West Bank – and another indication of the gloomy prospects for reaching a peace deal before President Bush leaves office.

"We've planted our stake," says Yosi Hazut, was evacuated fro the Gaza Strip by Israel in 2005 and moved here six months ago. "This is a settlement like any other community in Israel. We're not waiting for the government."

Secretary of State Condoleezza Rice was scheduled to meet with Israeli and Palestinian leaders on Wednesday in an effort to salvage the peace talks.

Under the US-sponsored "road map" peace plan, Israel is supposed to freeze settlement construction. But Israel has continued to build in existing West Bank settlements and in east Jerusalem since restarting negotiations with the Palestinians last year.

The construction in Maskiyot represents a new complication: It would establish a new town of Jewish settlers in a remote part of the occupied territories – the very type of location that Israeli Prime Minister Ehud Olmert once spoke of withdrawing from.

"It runs against the logic of peace," says Mohammed Dajani, a political science professor at Al Quds University in Jerusalem. "Rather than moving forward with the peace process, we are taking steps backward to conflict."

Palestinian negotiator Saeb Erekat called on the US to press Israel to reverse the decision, warning that Maskiyot will further muddle the prospects for a Palestinian state.

But with the political authority of both the US administration and Israeli Prime Minister Ehud Olmert's government buckling, commitment to the peace process also appears to be eroding.

On Monday, Mr. Olmert told an Israeli parliamentary committee that he doesn't expect to reach an accord with Palestinians on Jerusalem before the deadline for the talks at the end of 2008.

Akiva Eldar, a political commentator for the left-leaning Ha'aretz daily, says he doesn't expect Olmert to reverse his position, especially with early elections looming.

"It's now a twilight zone," he says. "That's the best time for the settlers. This is when they really flourish."

Maskiyot, first approved in 1982 as a strategic buffer between Israel and any potential assaults from the east, attracted few Israelis.

This year, however, six new mobile homes have been erected.

In Maskiyot's midday heat, most residents stay indoors. Inside one prefab unit, Ayelet Hazut, Yosi's wife, recalls being ordered out of the Gush Katif, the community where she was raised.

"It's like a hole in your heart," she says. "We're young people looking for a mission, and we wanted to continue our ideology from Gush Katif."

Mark Regev, a spokesman for Olmert, said the issue of Maskiyot hasn't reached the Israeli leader's desk yet, but the defense ministry offered an unequivocal position.

"Maskiyot is a settlement that exists and has been on the map," says an Israeli ministry official. "The place is bubbling with life. There is no intention to relent on the decision."

Foreigners aren't inclined to accept Israel's argument. "To say Maskiyot is an old settlement throws sand in the eyes of the international community," says one Western diplomatic official.

Hagit Ofran, who heads the settlement watch project for the left-wing Israeli group Peace Now, says the decision to build permanent buildings will change the character of the settlement.

"It's really crazy the government of Israel is lying to itself, the Palestinians, and the settlers."

Back at Maskiyot, however, Mr. Hazut stares at a computerized topographical map of the settlement and waxes about attracting 400 families over the next decade and setting up an industrial park.

"That's the vision," he says.