JERUSALEM, Jan 16 (Reuters & JMCC) - Israel's Supreme Court gave the government the go-ahead on Wednesday to remove tents Palestinian activists pitched on a patch of West Bank land marked for Jewish settlements.

On Sunday, Israeli police evicted 50 Palestinian protesters from the site, in the E1 area outside the Arab suburbs of East Jerusalem, where Jewish settlements could split the Israeli-occupied West Bank in two.

But the activists' large, steel-framed tents remained standing in accordance with a court order banning the government from tearing them down while judges considered a Palestinian claim of ownership of land where the encampment was built.

The court's new ruling cancelled its previous order and agreed with the government's argument that the tents could be a magnet for violent Palestinian protests.

In its reasoning, released by the Justice Ministry, the court noted that clashes broke out at the encampment on Tuesday, when Israeli police, using stun grenades, blocked protesters who had returned to the site and tried to reoccupy the tents.

Palestinian officials condemned the high court ruling and the police actions against the protesters.

This proves that there is no rule of law for Palestinians, only for Jewish Israelis, said prominent Palestinian politician Mustafa Barghouti, one of the original protesters at the tent camp dubbed the village of Bab al-Shams by activists.

Part of it is built on private land and part of it is on 'state land,' a concept that Israel has distorted, and it should rightly be Palestinian state land, he told Reuters.

Israel has drawn strong international criticism over plans to build settler homes in E1.

For years it froze building in E1, which houses only a police headquarters, after coming under pressure from former U.S. President George W. Bush to keep the plans on hold.

But Prime Minister Benjamin Netanyahu announced plans late last year to expand settlements after the Palestinians won de-facto statehood recognition at the United Nations General Assembly in November.

Most countries view Jewish settlements in areas captured by Israel in the 1967 Middle East war as illegal and echo concerns voiced by Palestinians that building more settler homes could deny them a viable and contiguous state.

E1 covers some 12 square km (4.6 square miles) and is seen as particularly important because it not only juts into the narrow waist of the West Bank, but also backs onto East Jerusalem, where Palestinians want to establish their capital.

About 500,000 Israelis and 2.5 million Palestinians live in the West Bank and East Jerusalem. Direct peace talks between Israel and the Palestinians broke down in 2010 over the issue of Israel's continued settlement building. (Reporting by Jeffrey Heller in Jerusalem and Noah Browning in Ramallah; Editing by Robin Pomeroy)