Defense Minister Moshe Ya'alon on Sunday approved the return of Jewish settlers to a contested house known as "The House of Peace" in the West Bank city of Hebron, a statement from his office said.
"Following the court decision... Defense Minister Moshe Ya'alon today approved habitation of the house," the statement said, adding that the area military instructor had been told to allow "a limited number of families to the house."
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The Palestinian Rajabi family has for years said its four-storey building had been taken over fraudulently by Israeli settlers.
A lower court in 2012 accepted their claim, ruling that the settlers’ assertion that they had legally purchased the property "does not hold water."
The Supreme Court overturned that judgment on appeal.
The building is near a contested holy site known to Muslims as the Ibrahimi Mosque and to Jews as the Cave of the Patriarchs in a tightly controlled Israeli enclave where many streets are off-limits to Palestinian cars.
The settlers were evacuated in 2008, and the Supreme Court ruling said they would not be allowed to move back in without defense ministry approval.
The flashpoint city of Hebron, home to nearly 200,000 Palestinians, also comprises some 80 settler homes in the centre of town housing about 700 Jews who live under Israeli army protection.