Israeli settlers took over a Palestinian home in the Muslim quarter of Jerusalem's Old City today, evicting about 45 members of an extended family which has occupied the building for more than 70 years.

The settlers claimed to have documentation to prove they had purchased the building from the owners. The Palestinian tenants, who have been fighting attempts to evict them for many years, were challenging the takeover in court.

A police spokesman said the Israelis had entered the home "based on documents claiming that they owned the property".

According to Mohammed Kirresh, 22, a member of the Palestinian family, "Jewish people and Israeli soldiers with weapons" came at 2am, when most of the family was at a wedding.

He said the family, which had rented the property since 1936, had won two previous court cases challenging eviction orders. He claimed the Israelis had broken furniture and damaged belongings.

"Everything we own is inside – our money, ID papers, clothes, food," he said. Armed police were guarding the entrance to the house.

Around 20 members of the Kirresh family pledged to stay on the narrow street outside the house. "We are staying here," said Mohammed Kirresh. "We hope the court will rule in our favour."

The new occupants of the house refused to speak to the press.

Dozens of settler "outposts" have been established in the Old City over recent years, many hanging huge Israeli flags in the Muslim quarter. Settler organisations have offered large sums to Palestinians to sell property to them.

The Old City is located in East Jerusalem, which Israel captured and occupied – and later annexed – in 1967.