Said Ayid was born under the British Mandate, grew up in Jordan, raised his eight children under Israeli occupation and now lives on the edge of a sprawling new Israeli neighbourhood under the token protection of the Palestinian Authority.

But throughout those 73 years he has not moved an inch.

Two weeks ago, the Israeli government announced the addition of 930 new units in Har Homa, the new neighbourhood built in the past decade on the adjacent hillside south of Jerusalem, occupied by Israel in the Six Day War of 1967.

That number might have been higher, but Mr Ayid's tiny farm is the next parcel in line and he refuses to sell. His stubborn reluctance to leave his home has become a solitary stand against the concrete sprawl threatening his land and his livelihood.

"This was my grandfather's house. I was born here. I've lived every minute of my 73 years right here. I never even went to school. As long as I am alive, I will not leave my land," Mr Ayid told The Independent as Israeli bulldozers gouged out another few metres of his property.

In 1998, Robin Cook, who was then the British foreign secretary, provoked a diplomatic dispute with the Israelis when he visited the future site of Har Homa, then a pine-covered hilltop known to the Palestinians as Jabal Abu Ghneim that overlooked Bethlehem and the adjacent village of Beit Sahour. Mr Cook was accompanied by senior Palestinian officials and hundreds of protesters.

The politicians and protesters gave up the fight years ago, and the Palestinian Authority, while praising Mr Ayid's "steadfastness", have lifted neither finger nor chequebook to help him.

"My son went to the President's office in Ramallah to ask Abu Mazen (the Palestinian Authority President, Mahmoud Abbas) for help, but they did nothing," Mr Ayid said. "Thousands of Palestinians used to come here and protest but in they end they achieved nothing."

Mr Ayid inherited 25 dunams (6.25 acres) from his father, but seven years ago a platoon of Israeli soldiers and paramilitary border police arrived, sealing off 1.5 acres of his property that lay within the expanded municipal boundary of Jerusalem. He watched in frustration as bulldozers tore apart the agricultural terraces where he grew wheat and laid the foundations for two large residential blocks. The land was expropriated by an Israeli government order. He fought the decision in the Israeli courts without success.

Israel offered him compensation but he rejected it, refusing even to discuss a figure for fear that it would legitimise the next step: eviction.

"I refused to accept it on principle. If I signed an agreement allowing them to take that part of the land, they will take the rest," he said.

Twice, Israeli officials have appeared on his doorstep offering to buy the remaining property.

"They said 'name your price' but even if they gave me $10m (£6m) what's the use? How could I ever face God if I sold my land? Even if they fill the valley with their money I wouldn't take it," he said. "One day I will die. If I am poor I will die, if I am rich I will die. If I lose my land, the money doesn't mean anything."

Today, Mr Ayid scrapes a living for his extended family of 50 by tending a handful of goats and sheep and growing wheat and olives as the towering blocks of Har Homa form a spreading arc from west to north to east around his land.

To the south, the Israelis built an anti-terrorist security barrier five years ago across a route used by suicide bombers to enter Jerusalem from Bethlehem. Now Mr Ayid is completely encircled.

His grandfather owned another 2.5 acres of olive groves a 10-minute walk away in Beit Sahour. His brothers moved there before 1967. Today they cannot enter Jerusalem, while his Israeli permit allows him access only to his land. For medical treatment, food and emergencies, he must take an expensive half-hour trip through an Israeli checkpoint via Bethlehem.

"Since they built the wall, I have been isolated, cut off from Beit Sahour and Bethlehem. I'm sure they would love to take this land next," he said.

One morning during Ramadan he watched as Israeli surveyors mapped out a new access road and sewage line within the property he still retains. He will not be connected to the new drain, nor to the fresh water supply piped to the edge of his property. Instead he must draw water from a well. An Israeli electricity grid ends a few metres away, but his power comes from a line his father hooked up decades ago.

When the plans for Har Homa were first approved by the late Israeli prime minister Yitzhak Rabin, they seemed uncontroversial to the Israelis. The new project was one of a ring of southern Jerusalem neighbourhoods planned to secure Israeli control of Jerusalem. Located within the newly extended municipal boundary of Jerusalem, one-quarter of it would be built on land bought for Jewish settlement back in the 1930s that was subsequently occupied – illegally, in Israel's view – by Jordan.

But then came the 1993 Oslo Peace Accords, accompanied by the rapid northward expansion of Bethlehem, and the Palestinian demand for an Israeli withdrawal to the pre-1967 borders. Although Mr Rabin had no intention of ceding land in Jerusalem, the Har Homa plan suddenly seemed untimely and it was shelved.

Under Jerusalem's right-wing mayor, Ehud Olmert, and the right-wing, pro-settler government of Benjamin Netanyahu, the plan was revived and, despite international condemnation, building began in 1999. Today, 20,000 Israelis live in Har Homa and thousands more will populate the homes now being built. Palestinians say that, in addition to being built on illegally occupied land, the completed neighbourhood will form a physical barrier between Bethlehem and Beit Sahour to the south and the East Jerusalem villages of Um Tuba, Beit Safafa and Tsur Baher to the north.

"This plan changes the potential border between Israel and Palestine in Jerusalem more than any other East Jerusalem plan that has been approved in recent years and will make a permanent status agreement on Jerusalem incrementally more difficult," said Danny Seidemann, a human-rights lawyer who is a critic of Israeli policies in East Jerusalem.