Seen from afar, this fast-growing settlement embodies everything that the Obama administration wants to address through its demand for a freeze on settlement building: it sits on land captured by Israel in the 1967 Middle East war and, with 45,000 residents and 60 births a week, it is the largest and fastest-growing Jewish community in the West Bank.

If, as is widely believed abroad, “natural growth” by Israeli settlers is blocking the creation of a viable Palestinian state, this community should show why.

But appearances are deceiving. Modiin Illit and its sister community, Beitar Illit, are entirely ultra-Orthodox, a world apart, one of strict religious observance and study. They offer surprising potential for compromise.

Unlike settlers who believe they are continuing the historic Zionist mission of reclaiming the Jewish homeland, most ultra-Orthodox do not consider themselves settlers or Zionists and express no commitment to being in the West Bank, so their growth in these settlement towns, situated just inside the pre-1967boundary, could be redirected westward to within Israel.

Their location also means it may be possible, in negotiations about a future Palestinian state, to redraw the boundary so the settlements are inside Israel, with little land lost to the Palestinians. And the two towns alone account for half of all settler growth, so if removed from the equation, the larger settler challenge takes on more manageable proportions.

“If I thought this was a settlement, I would never have come here,” said Yaakov Guterman, 40, the mayor of Modiin Illit and a grandfather of three, his Orthodox fringes hanging from his belt, his side locks curled behind his ears. Asked about the prospect of a Palestinian state rising one day on his town line, he said: “We will go along with what the world wants. We have gone through the Holocaust and know what it means to have the world against us. The Torah says a man needs to know his place.”

Whether or not Mr. Guterman will be as pliant as he says, Middle East peace negotiators on all sides — Israeli, Palestinian and American — have long viewed small border adjustments and land swaps as key to a deal that would include a solution to the hundreds of thousands of Jews who have settled in the West Bank over the past four decades.

This week, three senior American officials will be in Jerusalem for talks that will include settlements: the Middle East envoy, George J. Mitchell; the White House Middle East adviser, Dennis Ross; and the national security adviser, Gen. James Jones. Secretary of Defense Robert M. Gates will also be in talks in Jerusalem.

Break With Settler Movement

The ultra-Orthodox inhabitants often express contempt for the settler movement, with its vows never to move. The people here, who shun most aspects of modernity, came for three reasons: they needed affordable housing no longer available in and around Jerusalem or Tel Aviv; they were rejected by other Israeli cities as too cult-like; and officials wanted their presence to broaden Israel’s narrow border.

Yet they are lumped with everyone else. The settler movement and the Israeli government point to ultra-Orthodox settlements, with their large and ever-increasing families, to argue that there is no way to stop “natural growth” without imposing acute human suffering. Those seeking a freeze use the settlements as evidence that growth is so out of control that drastic action must be taken. More broadly, opponents say the settlements violate international law, legitimize force by armed messianic Jews and ruin the chance of establishing a viable Palestinian state.

But even those who strongly favor a complete freeze acknowledge that the annual settler growth rates of 5 and 6 percent owe a great deal to these two towns that have little to do with the broader settler enterprise.

Dror Etkes of Yesh Din, an antisettlement group in Israel, noted that half of all construction in West Bank settlements was taking place in these two ultra-Orthodox communities, adding that given their location next to the boundary, it was highly likely they would be in Israel in a future deal through a redrawn border. “From a purely geographic point of view, construction there is not as destructive as elsewhere,” he said.

But he does not want building to continue in Modiin Illit or Beitar Illit without a deal for a Palestinian state, nor does he mean to imply that these settlements have been a benign force. “Land has been taken from Palestinians, in some cases from private landowners, for the building in these settlements, and there are many other issues like sewage flow into Palestinian villages that must be addressed,” Mr. Etkes said.

Settler leaders reject any distinction. The fact that the ultra-Orthodox came to the West Bank to solve their housing problems is “completely O.K. with me,” said Dani Dayan, chairman of the Yesha Council, the settlers’ political umbrella group. “They are an integral part of our endeavor and our achievement.”

The Palestinian View

But even in Bilin, the Palestinian village that abuts Modiin Illit and has become a symbol of Palestinian resistance against Israel’s West Bank separation barrier, the settlers over the fence are viewed as different from the Jewish nationalists in, say, Hebron.

Abedallah Abu Rahma, a teacher from a farming family and a leading activist in the village, pointed toward the settler high-rise buildings visible across the valley from his living room window and said: “They tell us, ‘We are poor, the apartments here are cheaper and we did not know it was a settlement.’ Many told us, ‘Give us our money back and we will leave.’ ”

The Palestinians, who hold weekly demonstrations against the barrier, have even joined forces with some of the settlers. Two years ago, Bilin won a major Supreme Court case that forced a change in the route of the barrier, and some of the documents the victorious villagers used, Mr. Abu Rahma said, had been secretly passed to them by ultra-Orthodox settlers feuding with their own municipal leaders.

Still, none of that lessens the harm to the villagers caused by the very existence of Modiin Illit and the contest over its land. Mr. Abu Rahma said he would respect any agreement reached between the Palestinian leadership and Israel, including one that had Modiin Illit standing in Israel. But noting the village’s reliance on agriculture, its own housing needs and the settlement’s encroachment on Bilin’s territory, he insisted, “We need our land.”

Moreover, protecting the settlements from attack has meant construction of numerous barriers, checkpoints and bypass roads that impair economic development and disrupt daily life.

Across the West Bank and excluding East Jerusalem, there are nearly 300,000 settlers living on scores of settlements among 2.3 million Palestinians. And while some say they will fight to stay put, a third are the reluctant ultra-Orthodox, known in Israel as Haredim, Hebrew for the fearful ones, or those who tremble in awe of God.

They believe it important to live in the land of Israel, because certain commandments can be performed only here. But some Haredim actively reject the formation of a Jewish state before the arrival of the Messiah, while others are ambivalent. They also say that protecting life trumps holding territory. Very few serve in the military because the ultra-Orthodox say they do more good for the nation by studying the Torah and praying than fighting.

Until his death in 2001, Rabbi Eliezer Schach was the religious authority of the Haredim of European origin. He opposed building Jewish settlements that extended over the 1967 line into territory Israel seized in the war, once calling them “a blatant attempt to provoke the international community” and complaining that they endangered Jewish lives. In fact, when first offered housing for his followers in Beitar Illit, he took it as an insult, according to Yitzchak Pindrus, a former mayor of the settlement.

“Our people live around their families and rabbis, and they were terrified of the idea,” Mr. Pindrus recalled. But with thousands of new couples marrying every year, and the traditional ultra-Orthodox communities expensive and crowded, the Haredim needed homes.

Because few ultra-Orthodox men work, because on average their families have eight children and because they do not integrate easily into the larger community, Teddy Kollek, who was mayor of Jerusalem in the late 1980s, wanted to keep down their numbers. Other cities rejected them. Yitzhak Rabin, as both defense minister and then prime minister, championed the creation of large settlements around Jerusalem to fortify Israel’s hold on the capital, in line with his Labor Party’s strategic plan, so he and the Haredim struck a deal for Beitar Illit in the early 1990s.

For those wanting to remain closer to longstanding Haredi communities in the center of the country, Modiin Illit was an alternative. Private Israeli developers bought tracts of Palestinian land as its base, although the legitimacy of those sales has been challenged. Mr. Guterman, the mayor, said Mr. Rabin “gave his blessing to the city,” telling Rabbi Schach’s disciples that its strategic location on the first rise above Israel’s international airport guaranteed that it would not be given back.

There are smaller pockets of Haredi settlement deeper in the West Bank, where the arm’s-length attitude toward Zionist settlement has shifted toward a more distinctly right-wing ideology. Zvi Kastelanitz, of the Immanuel settlement, who produces silver-inlaid Jewish handicrafts, for example, said he had no objection to two states for two peoples, “but not here.” Still, the Haredi settlers even there remain distinct. After Palestinians ambushed two buses on the road to Immanuel, southwest of Nablus, in 2001 and 2002, killing a total of 20 people, the Haredi settlers did not react like their nationalist counterparts, defiantly setting up another settlement outpost. Instead, about a third of Immanuel’s 4,000 residents left.

Shunning Secular World

The Haredi world is all about being together and apart from secular temptations, an intricate patchwork of groups with allegiances to different rabbinic dynasties and courts. In the new cities, Haredi rules apply. At the entrance to Beitar Illit, a sign warns visitors to dress modestly. The streets are all named for rabbis and sages from Poland to Yemen. There is Internet access, officially intended for professional use only. Televisions are allowed, but nobody admits to having one. And there is poverty: about 40 percent of wives support their large families because their husbands do not work. There are few cars, lots of buses and baby strollers.

Dov Fromowitz, a father of nine who moved to Beitar Illit from the Williamsburg section of Brooklyn 12 years ago, runs a central charity fund that collects money from better-off residents and distributes it to the poor, while connecting them with other social welfare services outside the settlement. He says he has 1,200 needy families on his books.

Without most Israelis noticing, Modiin Illit and Beitar Illit have turned into the Haredi towns of the future, cleaner and saner versions of their often decrepit and densely packed neighborhoods elsewhere. They contain open space, even some greenery, and apartments with lots of bedrooms. Their young are shielded from secular Israel, and secular Israelis never see them, thereby reducing the tensions found in Jerusalem over driving on the Sabbath and sexy advertising at bus stops.

The Question of Coexistence

Even if the ultra-Orthodox appear to be less ideologically committed to the West Bank, the longer they live here, the more invested some have become.

In Modiin Illit, Mayor Guterman has ambitions to build what he calls “the largest Haredi residential community in Israel.” Over the past three years, he has set up a business center that he considers the wave of the future. Now 1,000 women, mostly mothers in their 20s, sit at work stations providing phone services to Israeli credit card clients and paralegal research for real estate businesses in the United States. It is outsourcing that seeks to take advantage of the educational level and work ethic of Haredi women.

The question of coexistence with Palestinians hovers, however. In Beitar Illit, farmers from the village of Husan enter daily in cars and on donkeys to work their lands in the valleys among the settlements’ built-up hills. The new mayor, Meir Rubinstein, is proud of the city’s cooperation with local Palestinians, whom he calls “the neighbors.”

“We very much want there to be peace here,” he said. “We pray for it three times a day.” But the question of peace at what price remains.

Avraham and Riva Guttman, who arrived in Beitar Illit 15 years ago from Toronto and have seven children, look out from their street at Palestinian villages. They believe strongly in living in the land of Israel, they say, and they are happy for the parks and space lacking in traditional Haredi areas of Israel. But they do not insist that it is there or nothing. “We are not here for political reasons,” Mr. Guttman said. “Ninety percent of the people are here for the affordability, not for ideology. Haredim don’t fight with Arabs.”

Perhaps not, but his wife, Riva, bristled at the idea of moving. “If you told me to move elsewhere because Arabs needed a place to live, it would not sit quietly on my conscience,” she said. “I am a Jew in the Jewish homeland.”

And increasingly, the Haredim have vested interests over the 1967 line. Yaron and Sara Simchovitch arrived in Beitar Illit from Jerusalem 13 years ago with a group led by their rabbi. The couple now have a thriving butcher shop.

Yoseph Shilhav, an expert on the ultra-Orthodox at Bar-Ilan University, said that almost every Haredi family now had a member beyond the 1967 border, subtly shifting their attitudes about settlement and withdrawal. The Haredim make up 10 percent of Israel’s population and are a fast-growing electoral force. The Chabad movement and Sephardic or Middle Eastern-origin Shas party have increasingly adopted the nationalist agenda.

The rocket fire into Israel that resulted after its withdrawal from Gaza in 2005 has also taken its toll on Haredi views. “In general, Haredim are very practical people,” said Mr. Pindrus, the former Beitar Illit mayor. “We are not right or left. If we get up in the morning and see that leaving Gaza means missiles, then no, we’re not leaving another centimeter.” He added, “We want to live, and our children not to blow up.”

Still, a surprising number do not oppose the establishment of a Palestinian state if safety can be guaranteed. Since housing is the No. 1 Haredi concern and they feel no need for it to be in the West Bank, redirecting the building of their new homes inside Israel could go a long way toward a solution.

“If the Americans can convince us there will really be peace and we won’t be living in fear of rockets, we’ll bring a recommendation to our rabbis,” said Mr. Guterman, the mayor of Modiin Illit. “Our rabbis want peace. We are not against withdrawing from territory. But life is above all.”