The Israeli state has swung into action against a group of Palestinian activists who established a tent village on a rocky hillside east of Jerusalem, with hundreds of security officials carrying out an eviction under the orders of the prime minister, Binyamin Netanyahu, in the early hours of Sunday morning.

According to activists, a large military force surrounded the encampment at around 3am. All protesters were detained and six were injured, said Abir Kopty.

On Saturday evening, Netanyahu demanded the Israeli supreme court overturn an injunction preventing the removal of the tents, and ordered the area to be declared a closed military zone.

Around 200 Palestinian activists set up the village, named Bab al-Shams ("gate of the sun") and comprising around 20 tents, early on Friday morning on a highly sensitive swath of land known as E1, which Israel has earmarked for settlement development. The protesters' actions echoed the tactics of radical settlers when establishing outposts in the West Bank.

The tents were erected on privately owned Palestinian land, the protesters said, with the full permission of the landowners. The activists sought legal protection from the supreme court, which granted an injunction and gave the state of Israel up to six days to respond.

Following the eviction, the Popular Struggle Co-ordinating Committee, which was involved in setting up the camp, said the state's actions were illegal because Bab al-Shams was established on private land. "The action succeeded in inspiring all the residents of the village as well as Palestinians around the world. This is not the end of the popular struggle."

Palestinian legislator Mustafa Barghouti, who was among those detained, said the eviction was "proof that the Israeli government operates an apartheid system. Firstly it decided that supreme court decisions do not apply to Palestinians. And secondly, there are more than 120 Israeli outposts in the West Bank that are illegal even under Israeli law. Not only are they still there, but they are expanding and they are being legalised one after another. We were there for less than 48 hours, and the state used violent force against a non-violent peaceful resistance movement."

The protest was launched six weeks after Netanyahu announced plans to press ahead with the development of E1, triggering strong international condemnation. The area, measuring around 12 sq km, lies between Jerusalem and the vast West Bank settlement of Ma'ale Adumim.

The Palestinian Authority and most western diplomats say the development of E1 will damage the prospects of a viable Palestinian state by almost bisecting the West Bank, effectively cutting it off from East Jerusalem, which is intended to be the future capital of a Palestinian state.

Speaking on Israel army radio on Sunday, Netanyahu said that planning for E1 is moving ahead and that "there will be construction".

Asked why the protesters were removed, Netanyahu said: "They have no reason to be there. I asked immediately to close the area so people would not gather there needlessly and generate friction and disrupt public order."

On Saturday, scores of Palestinian activists visited the site, perched close to a Bedouin encampment and within sight of a huge Israeli police headquarters. Activists brewed sweet tea and coffee on open fires, and volunteers manned a medical centre in one tent. Rubbish was collected by a team organised by a member of the seven-strong "village council".

Mahmoud Zawahra, a protest leader, described the tent village as "constructive resistance".

"We are part of a non-violent resistance movement. For us, this is occupied land so we created a village to stop the Israeli plan to build a settlement here," he said.

Another activist, Samir, who declined to give his full name, said the protest had been organised secretly. "We know the army follows us on Twitter and Facebook, so we made out we were holding a protest somewhere else."

Activists were trained in non-violent resistance techniques, he added. "This is not a Scout camp, it is to empower Palestinians on the ground. We know [the army] will come, and we are prepared."

Tha'ar Aniz, from nearby Azariya, said temperatures had plummeted overnight. "It was very cold. But if you want to be free, you have to withstand such things."

Israeli security forces prevented Palestinian officials Hanan Ashrawi and Saeb Erekat from visiting the site on Saturday. Earlier, Ashrawi welcomed the establishment of Bab al-Shams, saying: "This initiative is a highly creative and legitimate non-violent tool to protect our land from Israeli colonial plans.

"We have the right to live anywhere in our state, and we call upon the international community to support such initiatives, as well as to protect those who are being threatened by Israeli occupation forces for exercising their right to peaceful resistance against the illegal Israeli occupation."

• This article was amended on 14 January and 17 January 2013. Activists were detained but not formally arrested. In addition a sub-heading and text were amended to make clear the Supreme Court injunction referred to tents rather than the protesters. This has been corrected.