On its own, it seemed like an encouraging omen to anyone alarmed by the increasing entrenchment of Jewish settlers on the West Bank. Israeli security forces last week forcibly evacuated hardliners from a Palestinian house in the volatile city of Hebron, to the fury of the settlers and their backers.

Hours earlier, Binyamin Netanyahu had intervened to halt the eviction; now he said the rule of law must prevail. Had the prime minister had a change of heart? Did the Hebron drama signal a new tough approach against radical settlers and their supporters inside Netanyahu's cabinet?

It seemed not. Shortly after the operation in Hebron, it emerged that Netanyahu was seeking ways of "legalising" four settler outposts in the West Bank whose demolition had been ordered by Israel's courts because they were built on privately owned Palestinian land or were constructed without permits. These outposts have been ruled illegal under Israeli law. Under international law, specifically article 49 of the fourth Geneva convention, all settlements in occupied territory are illegal.

One, known as Ulpana, has been the subject of a protracted legal challenge over land ownership, which ended with the supreme court ordering its demolition by the end of this month. On the day of the Hebron eviction, Netanyahu asked the attorney general "to see to it that [Ulpana] not be evacuated".

He also instructed that the status of three other outposts, built without authorisation, "be provided for". If permits are retrospectively granted, they will gain the status of settlements. The last new West Bank settlement to be authorised by the government was in 1999.

In his statement, Netanyahu said: "The principle that has guided me is to strengthen Jewish communities in Judea and Samaria [the biblical term for the West Bank]."

Another outpost, Migron, has also been the subject of a long legal battle, at the end of which the supreme court ruled it was built on privately owned Palestinian land and must be demolished. A subsequent deal to delay demolition for three years to allow for the settlers to be relocated to land nearby was overturned by the court; the new deadline is 1 August. Intense lobbying by the settlers and their supporters may yet stop the bulldozers.

The government's critics say that rather than upholding the rule of law, Netanyahu is seeking to change, bend or bypass the law in order to protect illegal outposts. Referring to Ulpana, Shlomo Zacharia, the lawyer for the Palestinian landowners, was quoted as saying: "The prime minister, in effect, is demanding that the attorney general find a way to prevent the return of stolen property to its legal owners … The prime minister ought to stop encouraging land theft and backing violations of the law."

None of this bodes well for the diminishing prospects of any agreement on borders and territories with the Palestinians. The international diplomatic consensus is that a deal would take the big settlement blocs across the pre-1967 "green line" on to the Israeli side of a new border, with compensatory land incorporated into the new state of Palestine. Other settlements dotted around the West Bank would have to be evacuated.

Israeli politicians and officials speak of "painful sacrifices and compromises" that would be required to reach a deal. But the government's reluctance even to comply with Israeli court rulings on unauthorised hardline outposts suggests that the evacuation of thousands of Israelis who moved to West Bank settlements under state encouragement and financial inducements is not on his agenda.

It is often pointed out that Netanyahu is under political pressure from the rightwing pro-settler factions in his coalition government who issue portentous warnings about the consequences of touching a single hilltop caravan. But despite regular threats to bring down the coalition, Netanyahu's three-year-old government is relatively stable, his opinion poll ratings are solid and the opposition Kadima party has just replaced its leader amid internal divisions. And there are few voices inside Israel demanding action against settlements and outposts.

Most criticism comes from outside. In a strongly worded statement last week following the publication of tenders for almost 900 new units in an East Jerusalem settlement, William Hague, the UK foreign secretary, reiterated: "Illegal Israeli settlement activity poses the most significant and live threat to the viability of the two state solution … The Israeli government's policy is illegal under international law, counter-productive, destabilising and provocative."

But without the US weighing in heavily – unlikely in an election year – Israel can brush off such criticism. The strategy of consolidating and expanding the Jewish presence in the occupied West Bank continues unabated.

Many Israeli commentators say Netanyahu lacks vision and boldness. But his real achievement over the past three years has been to win decisively a diplomatic standoff over settlements, entrench the status quo and push the issue of a peace agreement with the Palestinians down the agenda.