Clashes between Palestinian protesters and Israeli soldiers have halted work on the most controversial section of Israel's West Bank security barrier.
The Ariel settlement is deep within the West Bank
Protesters threw stones at bulldozers attempting to begin work levelling land near the Ariel settlement bloc, deep in the West Bank.
Israeli soldiers responded by firing tear gas.
Palestinians say the barrier is designed to grab their land, but Israel says it is to prevent suicide bombings.
Israel and the US had previously agreed to postpone work on the barrier around Ariel, near the village of Iskaka.
Hundreds of protesters were involved in the clashes, which saw a bulldozer's windscreen shattered but there were no reports of injuries.
The arrival of bulldozers came just hours after US State Department spokesman Richard Boucher said late on Tuesday that the section of the barrier enclosing the Ariel enclave was problematic.
"It's a problem to the extent that it prejudges final borders, that it confiscates Palestinian property, or that it imposes further hardship on the Palestinian people," Mr Boucher said.
The Ariel settlement bloc is one of the largest of the Jewish settlements in the Palestinian territories.
Under international law all settlements in what is considered occupied territory are illegal.
A United Nations report has condemned the barrier as illegal and tantamount to "an unlawful act of annexation".
Part wall and part fence, the barrier, if completed, will run for 640km (397 miles) through the West Bank.
Israel's Haaretz newspaper has reported that the land seizures around Ariel uphold a promise given by Prime Minister Ariel Sharon to Finance Minister Benjamin Netanyahu which clinched the latter's support for the Gaza disengagement plan.
Mr Sharon, the newspaper said, promised that the separation fence in the Ariel area would be completed before the withdrawal from the Gaza Strip was finished.
Land seizure orders are reportedly expected for areas around two other settlements built deep in the northern West Bank, Emmanuel and Kedumin.
The US administration has not opposed the barrier in principle but has called for it to run close to the Green Line, the internationally accepted demarcation line between Israel and the West Bank.
The Israeli government is committed to building a barrier around Ariel and nearby settlements. No official decision has been made to link this to the parts of the barrier that run closer to the Green Line.
An Israeli military spokesperson told BBC News Online "the security fence around Ariel is being built in accordance with the understandings with the US government".
Palestinians say that Israel plans to link the Ariel barrier to larger West Bank barrier, effectively annexing large parts of territory - and some of its most fertile land - to Israel.