There are few more pressing issues for the Palestinians of Salfit, living deep in the rocky hills of the occupied West Bank, than the remarkable expansion of the Israeli settlements around them.

Sitting along a broad hilltop range above them is Ariel, one of the largest and oldest settlements in the West Bank, and one that Israel is intent on retaining in any future peace agreement with the Palestinians. Dotted on the nearby hills are more settlements carving a deep swath through the area that reaches nearly 15 miles into the territory.

At a time when Middle East peace seems ever more distant, with Israeli and Palestinian leaders still far from engaging in direct talks, a grassroots organisation called One Voice came to Salfit hoping to start a constructive debate about the impact of the settlements, and even to explore if the Palestinians might one day compromise over them in peace talks.

But there is little appetite in Salfit for any such concession. Munir Abbushi, the local governor, told an audience of his town's residents that he was strongly opposed to settlements. "Talking about peace while we have settlements is impossible," he said.

"Our choice is peace and a two-state solution. We don't have any ambitions to take all of historic Palestine, we just want the West Bank and Gaza and to live peacefully."

He said a "small state" of "limited zones" surrounded by Israeli settlements, which in the West Bank increasingly feels like a very real possibility, was unacceptable. There were already 17 separate settlements in his governorate, he said.

Isam Baker, a Palestinian settlement expert, told the audience he too opposed all settlements, which he argued were an Israeli policy to control as much land as possible. "It is time for a political decision and a national strategy. We have to stop all negotiations with Israel completely until the settlements are stopped," he said.

One Voice had hoped to use the meeting to open a debate among Palestinians. It followed another meeting in the Israeli town of Sderot, near Gaza, in which Palestinian rocket fire was discussed, and came before a meeting in Jerusalem today, to debate the future of the city.

"What we are really trying to do is create a debate so people have choices to take to any future agreement," John Lyndon, an Irishman who heads One Voice Europe, said. "If you continue to negotiate along a completely separate track to what people are debating, then it's all for nothing because people aren't prepared to accept it."

Hanging on the wall in a conference room in the governor's headquarters, was an apparently innocuous sign in Arabic with the title of the talk: "A debate on the final status issues of settlements and land swaps."

The idea of land swaps, in which Israel would retain some settlements and in exchange give up unoccupied land inside Israel to the Palestinians, has been discussed in negotiations and by peace industry thinktanks for many years. It lies at the heart of the Geneva Initiative, a prominent, informal peace plan drawn up by Israelis and Palestinians.

But on the ground in towns like Salfit, even talk of the idea of land swaps is anathema. It reveals how vast the gap is between the top Palestinian negotiators and the people on whose behalf they are negotiating.

The first member of the audience to speak, Khamis Hamad, a retired teacher, earned applause when he dismissed the sign as "criminal" and "forbidden". "We all know that the people of Salfit are being prevented from living on their land. We don't need speeches or conferences. We need a solution," he said. "Settlements have to disappear. We should not exchange land."

Fathi Bouzayeh, 50, a former mayor of the nearby town of Kifl Haris, called for non-violent demonstrations against the settlements and the settler-only roads that crisscross the surrounding land. "This is my grandfather's land. I cannot give it to Israel. We should say to the Ariel settlers: 'This is my land and you can't use it.'"

Many others spoke, but none among them said land swaps might ever be successful.

Samer Makhlouf, the head of One Voice Palestine, tried to assuage the crowd. "We are just giving you the terms that are used and then you choose whatever you want," he said. "These terms have been put on the table in negotiations by our Palestinian Authority."

He said polling conducted by One Voice suggested most Israelis and Palestinians wanted a two-state solution and that nearly half the Palestinian population would accept some kind of land swap as a border adjustment, in which some settlements would remain under Israeli control.

"We don't give you solutions. It is for you to discuss everything," he said.