Israel's deputy prime minister has said the presence of Jewish settlers inside the West Bank city of Hebron has created an "unbearable situation".
Shimon Peres' comments come a day after settlers took over a building in Hebron, claiming to have bought it.
A local Palestinian family has disputed this claim, saying they had purchased the property.
Mr Peres said that the settlers should be evicted if it is proved that they have acted unlawfully.
A large Israeli force of police and soldiers is surrounding the three-storey building after large numbers of settlers moved in late on Monday.
The building is located near a road called Worshiper's Way, linking the nearby settlement of Kiryat Arba to the Tomb of the Patriarchs, a site holy to both Muslims and Jews.
Mr Peres said of the settlement of Kiryat Arba on the outskirts of Hebron had been built so that a Jewish community would be living alongside, rather than within, a Palestinian community.
"It is very hard to have both at the same time," he said.
Hebron was the first West Bank town Jewish settlers moved into after the territory was captured by Israel in the 1967 war and has been a frequent flashpoint of Israeli-Palestinian violence.
In 1997 Israel withdrew from 80% of the town but maintains a military presence there to protect the settlers.
The city is home to more than 150,000 Palestinians, and about 400 settlers.
All settlements in the West Bank, including East Jerusalem, are illegal under international law, though Israel disputes this.
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