An entire Palestinian village that has received Australian aid money to help improve living conditions is facing demolition by Israeli authorities.

Australian NGO Action Aid has been working in Susiya, about 50 kilometres south of Jerusalem in the Palestinian occupied territories, for the past four years.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 8 minutes 4 seconds 8 m Israel orders demolition of village that's received Australian aid money

It has established programs supporting women, including buying sheep and beehives, and has constructed two buildings that are used as a clinic and a kindergarten.

Village elder Abu Mohamad Nawaja was born and raised in Susiya village.

"Allow me to say thank you to the Australian Government, thanks to the Australian Action Aid," he told the ABC's 7.30 program.

But it may all be for nothing after Israeli authorities determined that planning permission was never given for the village to be built, and have granted a demolition order for the whole of Susiya.

"They will confiscate this land for the settlers, so they can expand their settlements and live comfortably," Abu Mohamad said.

"They want to destroy us, our lives and our kids' lives."

Susiya 'under no-one's definition' of village

Residents of Susiya have attempted to get planning approval for their homes but have been rejected. ( ABC News: Sophie McNeill )

The man leading the campaign to demolish Susiya is Sydney-born man Ari Briggs, who has lived in Israel for the past 22 years.

He is the spokesman for Israel's pro-settler organisation Regavim.

"What you are looking at when you look at Arab Susiya today is just a collection of tents, an encampment that has been set up there," Mr Briggs told 7.30.

People have been born and raised in Susiya village. ( ABC News: Sophie McNeill )

"Under no-one's definition could it be called a village."

For Mr Briggs, current events are inextricably linked to what happened thousands of years ago.

"The ancient Jewish community of Susiya, with its ancient synagogue, really ties the Jewish people to the area," he said.

"Just to relate it to Australia, you know Uluru? If graziers came and grazed on Uluru and decided to set up an encampment to be closer to those grazing field, I believe the Anangu tribe would have felt that it was wrong."

He cannot believe the Australian Government is supporting Susiya.

"I have sent information both to the ambassador here in Israel, and to the foreign ministry back in Australia," Mr Briggs said.

"Information that was used in court, information that stood up in court, and we believe these facts are the facts."

Susiya residents' application for planning approval rejected

The Department of Foreign Affairs has told 7.30 it is concerned Israeli authorities intend to proceed with the demolition of Susiya and has raised those concerns with Israel.

The residents of Susiya have attempted to get planning approval for their homes but have been rejected.

Studies show that between 2010 and 2014, Israel rejected more than 98 per cent of Palestinian requests for building permits in that area (Area C) of the West Bank.

Australian Moira O'Leary is the director of Action Aid in the occupied Palestinian territories.

"Under the planning system most Palestinians are not successful in getting planning permits from Israel," she told 7.30.

"The only alternative is that people have to move or they have to build illegally."

Israeli settlers have been given permission to establish their own town on the next hill, which they also call Susiya. ( ABC News: Sophie McNeill )

What makes the demolition of Susiya even more harrowing for the residents is that Israeli settlers were given permission to establish their own town on the next hill, which they also call Susiya.

It has electricity, running water and even a swimming pool.

"The Palestinians in Area C have very limited access to healthcare, to education, to running water, to electricity and other services like garbage collection," Ms O'Leary said.

"This is their land. It's their home, it's where they want to be.

"People live in these conditions because they don't have a choice."

The Israeli High Court is due to hear Susiya's appeal against its demolition next week.