Early in the morning, Nadia Matar drove to the hills south of Jerusalem, near the Palestinian town of Beit Sahour, and turned into a dusty, unmarked road. There she planted a sign which read "Welcome to Shdema". She drove on, stopping every few metres along the route to jam into the rocky ground a series of fluttering blue and white Israeli flags. Israeli soldiers let her pass unhindered as she drove up to the concrete ruins of what was until a few years ago the Israeli military base of Shdema.

Here, just a stone's throw from Palestinian homes and only a few minutes from the city of Bethlehem, Matar and her friends are intent on building a Jewish community, the next settlement outpost in the occupied West Bank.

It is a glaring challenge to the Obama administration, which is trying to halt all Israeli settlement growth as a precursor to renewed peace talks. But recent history suggests it is the highly-motivated settlers like Matar, 43, a mother of six born in Belgium and now living in the settlement of Efrat, who may in the end triumph on this particular dusty patch of land.

Tomorrow, the Israeli prime minister Binyamin Netanyahu arrives in London for a series of key meetings, including four hours of discussions on Wednesday with the White House's special envoy, George Mitchell, and talks with Gordon Brown tomorrow. The continued colonisation of the West Bank, an extraordinarily successful project over the past 40 years, will dominate the agenda. Settlement on occupied land is regarded as illegal by the rest of the international community, but nearly 500,000 Jewish settlers live in east Jerusalem and the West Bank. Shdema is even beyond Israel's West Bank barrier, which runs deep into Palestinian territory and which many believe will one day be the final border of Israel.

Matar's goal is "redemption of the land". In her view, the land on which the Palestinian homes sit belongs by Biblical and historical right to the Jewish people and is, for now, "temporarily under Arab occupation". She is trying to build a "Jewish Shdema" and to prevent the land from remaining Palestinian. After the military evacuated the base there were plans, since shelved, to build a hospital for Palestinians. "They want more pieces of land that belong to the Jews. They want to take it away from us," Matar said.

"The Land of Israel was given by God to the people of Israel," she said. "Some will tell you God gave it to us, others will say Jewish history of 4,000 years is our historical right … You don't have to be a religious Englishman to see London belongs to the British."

This is a rare insight into how outposts get built: with determined settlers and eventually complicit Israeli authorities.

At first, after the army withdrew from the base three years ago, soldiers closed the area off and prevented all settlers from approaching. But the settlers sneaked in and kept coming. Eventually Matar, a leader of the group Women in Green, and her supporters convinced the military to allow them in just once a week, on a Friday. They cleaned the buildings up, painted over graffiti, tidied the rooms and held workshops and discussions. Sometimes they have stayed the night, sometimes they have been allowed to come twice a week and eventually, they believe, settlers will begin to live here.

Similar struggles take place every week on other hilltops across the West Bank. All this is happening even though the Israeli government says in public it will allow no new settlements.

"At the beginning we fought against the army to come up here," said Matar. "But when they saw we were adamant they let us come on a Friday … But it's not enough for us. We don't want to ask permission to be in our homeland."

Now every time they come the army far from preventing them in fact provides them with security, deploying several soldiers and armoured vehicles but not interfering with their activities. In April the military also halted the construction of a Palestinian park, part funded by the US government, because it was at the foot of the hill claimed by the settlers at Shdema.

Already the settlers have produced a glossy brochure with architectural plans of the Shdema they would like to see: it has grassy lawns, lines of trees, a cultural centre and a small but thriving Jewish community.

On this day around 30 settlers of different ages gathered, among them several children, a rabbi and at least two women carrying discreetly holstered pistols. They sat in one room on plastic chairs as Tomer Karazi, 34, a rabbi with five children, discussed a Biblical text and the importance of building a new village in this Biblical land.

Later Karazi said he and his wife Hannah were ready to move from their home in the settlement of Nokdim to Shdema as soon as possible. "It's our duty not to escort the process of redemption from the outside but to be involved and active from the inside," he said. "We don't need to wait for things like water and electricity. And we really love the place. It's beautiful."

Then out came large tubs of white emulsion paint and several brushes and the group began painting over the grey concrete walls, stopping occasionally for glasses of water and slices of watermelon.

Yosef Ziggerman, 18, a settler from Efrat had been involved in several other, often unsuccessful, attempts to establish new outposts on nearby hills. "I believe every single piece is ours and I don't see many pieces of land as beautiful as this," he said. "We aren't doing anything crazy or fanatic. We're painting and making it look nice."

Several spoke of their frustration with other Israelis who enjoy the more secular lifestyle of cities like Tel Aviv or Eilat but who seemed not to understand or endorse the settlers' millenarian ideology and their effort to claim the West Bank as their own. Since Israel withdrew its settlers from Gaza four years ago, many fear more compromises and would rather take a more radical and practical stand to expand Jewish settlement of the West Bank.

They described themselves as a frontline in a wider struggle against what they see as radical Islam, insisting that settler outposts protect the larger settlement blocs, which in turn protect Tel Aviv and Jerusalem, and which in turn protect the Western world.

"People like to present us like crazy lunatics," said Matar. "But one day these people in the West will see. The Muslims are taking over there too. You better be on our side for your sake, but you guys in Europe are not. Those who curse Israel will be cursed, and those who bless Israel will be blessed."