Prime Minister Salam Fayyad got behind a horse-drawn plough in the West Bank on Tuesday and drilled a furrow in protest against Israeli control of Palestinian land.

Wearing a T-shirt and a hat, the former World Bank economist put his foot to the rusty plough as Jewish settlers watched from a hilltop outpost nearby.

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Fayyad was marking 'Land Day', the annual commemoration of protests in 1976 against Israel's "appropriation of Arab-owned land in the Galilee". It is marked in the West Bank, the Gaza Strip and in Arab towns inside Israel.

The field he ploughed lies in a zone which falls under full Israeli control, classified as "Area C" according to the Palestinian-Israeli interim peace agreement.

As part of his plan to build the institutions of a Palestinian state by 2011, Fayyad has said that such territory -- which makes up 60 percent of the West Bank -- would be the "theatre of our operations".

"This is a symbol of our complete rejection of settlers' plans and of our people's determination to hold onto and care for their land," he said. "Our people are deeply rooted here."

Fayyad is a frequent visitor to "Area C", where Jewish settlements are planted among the towns and villages of the West Bank's 2.5 million Palestinians.

Palestinian President Mahmoud Abbas refuses to re-launch peace talks that have been suspended for 15 months until Israel orders a total freeze on settlement building. Israeli Prime Minister Benjamin Netanyahu ordered a partial freeze in November for a 10-month period.

The village of Qarawat Bani Hassan is flanked by Jewish settlements.

Settlers from one outpost recently starting marking out land in what villagers said was a clear prelude to its seizure.

Fayyad came overland in a four-wheel-drive vehicle on a dirt road. He promised villagers it would be paved, a promise he has kept in a number of the more remote West Bank villages.

Israel says Fayyad's two-year plan to build up the institutions and infrastructure of a viable state may be a precursor to an attempt to declare independence unilaterally.

Fayyad said he wanted to create "our version of facts on the ground, positive facts on the ground, consistent with our people's right to self determination on their own land".

"We are more determined than ever to get this done within the time that we have identified," he added referring to his target date of mid-2011.

Western-backed Abbas recently backed away from a proposal to resume indirect peace talks with Israel, with American mediation, after the Jewish state announced plans to extend settlements in East Jerusalem, which it annexed in 1967.

The annexation has never won international recognition.

Palestinians want to establish their state in the West Bank, east Jerusalem and the Gaza Strip. But Gaza has been ruled since 2007 by the Islamist group Hamas, which rejects any treaty recognizing Israel and opposes Abbas and Fayyad.

Fayyad noted that nearly 20 years of interim peace agreement had brought a two-state solution no closer.

"We have to ask ourselves, each one of us: What is it I am going to do today to move this project (state building) forward, an inch, a step," he told Reuters.

One day, he said, "we will be able to enjoy that which is an absolute right for all peoples around the world: to live in freedom and dignity in a country of our own."

Another demonstration was held in the village of Budrus, located west of Ramallah. Israeli security forces dispersed the 300 protestors. Three demonstrators said they were injured while trying to plant olive trees along the West Bank security barrier's route.

The army said 70 protestors hurled stones at security forces, who responded with crowd-dispersal means.

In Gaza, protestors marking 'Land Day' approached the border fence. According to the IDF, the demonstrators ignored calls to leave the area, forcing Israeli soldiers to open fire. The army said the troops had fired at the demonstrators' legs.

The Palestinians claim that a 15-year-old protestor was killed in the incident.

During the central 'Land Day' rally in the Arab-Israeli town of Sachnin, thousands of people waved posters of Hezbollah leader Hassan Nasrallah and assassinated Hezbollah commander Imad Mugniyah.