In his diary on 14 May 1948, David Ben-Gurion, later to be first prime minister of Israel, recorded the events leading to Israel's declaration of statehood.

It is marked in a handful of words: "At four o'clock in the afternoon, we declared independence. The nation was jubilant – and, again, I mourn in the midst of the rejoicing."

The cause for grief had been relayed to him at two o'clock that morning – the first entry in his journal. "General Staff Meeting. At 2am a telegram from Fritz [Eshet]: waving a white flag at Kfar Etzion resulted in a massacre of the defenders by the Arabs."

Sitting in a cafe in West Jerusalem, Yossi Ron describes what he knows about that day. Now 67, Ron was one year old the day Ben-Gurion wrote those words and already an orphan, the only child to lose both his parents, Holocaust survivors and Haganah fighters, in the worst military disaster for Jewish forces during the war for independence. They were among 127 killed..

New arrivals at Kfar Etzion in 1946 perform the hora, a Jewish traditional dance. On 14 May 1948, 127 of these settlers were killed. Photograph: Frank Noel/AP

Yechiel Rosenfeld, Ron's father, was one of those executed after the fall of the kibbutz by local Arab militiamen and, according to some accounts, by allied Arab Legionnaires – the latter still notionally under British commands – in the grounds of the old German Monastery in Kfar Etzion. His mother, Tzipora, a nurse as well as a fighter, was killed by grenades thrown into the monastery's cellar.

"I didn't speak about it until seven years ago," says Ron, a former airforce colonel and electronic engineer. "I didn't even talk much to the [four survivors] until I was 60. It was my wife who had a strong feeling for the story. For a long time she kept my family's memory better than me."

Tzipora, born in the Polish city of Lodz, was 14 when she first met her future husband – Ron's father, Yechiel – in a forced labour camp. "My father was 18. She fell in love with him and he tried to ignore her as she was a child. But she could be very stubborn."

After liberation, they married, Tzipora still just shy of 17. By1946, the couple were in Germany, where his mother alone received permission to travel to British Mandate Palestine with a group of children.

Trying to follow illegally, his father was arrested and interned in Cyprus before being able to join his wife in June 1947. "She'd gone directly to Kfar Etzion," says Ron.

A collection of four religious kibbutzes in the Hebron hills south of Jerusalem, the Etzion Block, had been re-established in 1943 after three previous failed attempts by Jews to settle there. At its centre was Kfar Etzion, built around two monastery buildings and a rough 300-metre airstrip. Within a few months of Yechiel's arrival, the UN Partition Declaration of 29 November, 1947, would place it in the territory exclusively intended for the Arab state.

Much of what Ron has learned about his parents has come from letters, from survivors of the final 10-day battle and from his maternal aunt who arrived on his doorstep in 1977.

"My mother was very assertive. When the order came for the children to be evacuated, she didn't want to be separated from my father again. She couldn't see herself with the mothers. But a month before the massacre she asked if she could be reunited with me.

"There was a meeting. She was told they could not hold her back but her departure would be bad for morale. She was told her presence was important to the spirit of the defenders."

So they stayed. After his parents' died, Ron was sent with other children to an orphanage near Jaffa and was later adopted.

It would not be until 1967 that Jews returned to the ruined kibbutzes and the Etzion Block became re-established as Israel's first settlement, its prime movers, the 71 "children of Etzion" who had lost parents in the battle.

Today, around 80,000 people live in Gush Etzion and its related settlements. The German monastery where Yehiel and Tzipora died is now a visitors centre in the midst of redevelopment, the still open bunker the centre of its memorial, its walls inscribed with the names of those who died.

Several days before memorial day and independence day – holidays created by Ben Gurion in 1951, to mark the cost of statehood – Kfar Rtzion is busy with visiting school parties and groups of young soldiers.

Shani Simkovitz, director of the Gush Etzion Foundation, shows the trailer for the new feature film about the massacre. An actress plays the part of Tzipora.

Benny Morris, the Israeli historian who wrote 1948 depicting the independence war, explains the significance of Kfar Etzion in moulding the Israeli psyche and the genesis of the Israeli settlement project.

"The first important thing was that this major defeat was the biggest defeat suffered by the Jews.

"Its wider significance was for the original settlement movement driven by the children and the survivors who wanted to go back and reassert their imprimatur on the site."

In a place where ownership and insistence on historic narrative is as powerful as any weapon, Kfar Etzion is a symbol. Writing in 2002, David Ohana went further: "In more than 50 years of Israel's existence, the politics of memory has probably not known any achievement more impressive than ... the sons of Kfar Etzion."

Ron says his faith in the peace process and his trust in Palestinians was lost during the suicide bombing of the second intifada. But his personal history and the fate of his parents has not left him bitter. "People sometimes ask if I hate the Arabs," he volunteers, "but despite what happened to my parents, I don't."