A last-minute agreement between the settlers and the government over the future of the largest outpost in the West Bank may avert a violent confrontation.

Prime Minister Benjamin Netanyahu implored the settlers on Sunday to accept the government's previous offer to rebuild the homes of 50 families of the Migron outpost at a site nearby, enabling it to comply with the court order to dismantle the outpost.

This compromise, which was formulated by cabinet minister Benny Begin, was rejected by the settlers, who object to any dismantling of houses. They have warned that they will physically fight any attempt to evict them.

Mr Netanyahu has been under increasing pressure from right-wing members of his party to find a way to allow Migron to remain at its current location.

The new compromise, which was reached in talks between the settlers and deputy Knesset speaker Danny Danon, also involves building a new settlement for the Migron residents on nearby government-administered land, but it would turn the current outpost into a non-residential farm instead of dismantling it.

The Prime Minister previously considered passing a special law in the Knesset to expropriate the land on which Migron is built and compensate the Palestinian owners. Such a law, however, may be struck down by the Supreme Court.

It is also unclear whether the new compromise between the government and the settlers will receive the blessing of the Supreme Court, which has ordered the demolition of the current outpost by March 31.

At least part of the outpost, which was built on disputed land, belongs to Palestinian civilians. Peace Now petitioned the Supreme Court in 2006 on behalf of the Palestinian owners and in 2008 the government notified the court that it intended to dismantle the outpost.

However, for over three years, the government has failed to reach an arrangement whereby the settlers would undertake to leave Migron without violence.