A weekend rally in Jerusalem by Israelis demanding an end to their country's settlement and occupation of the West Bank was hailed by its left-wing sponsors as the start of a major push that could help U.S. peace efforts.

But the turnout of just a couple of thousand people drew scorn from settlers, who count on the rightist-led government of Prime Minister Benjamin Netanyahu to resist President Barack Obama's drive for a deal to establish a Palestinian state.

"This is a beginning," said one of the rally's organisers, Yariv Oppenheimer of the anti-settlement Peace Now group, promising to step up public campaigning. "It's a good turnout."

A crowd of 2,000 or so -- a shadow of the mass peace rallies of the 1990s but an improvement on recent attempts to galvanise support -- waved blue-and-white Israeli flags and placards reading "Zionists Are Not Settlers" on a warm Saturday evening.

Speaker after speaker told them they were the true patriots defending a Jewish state which risked disaster if "nationalists" on the right held on to occupied land so that Palestinians under Israel's rule would soon outnumber its 5.5 million Jews.

"We want a Jewish state for the Jewish people with clear, recognised borders, not a Jewish state built on settlements and discrimination," said Eldad Yaniv, a founder last year of the National Left, one of several new groups arguing Israel must quit Arab land to remain a democracy with a Jewish majority.

Accused of treason and of being "anti-Zionist" by the "national camp" comprising religious settlers and their backers on Israel's right, the National Left's manifesto focuses on establishing its own credentials as defenders of a Zionist state whose founding generation were mostly secular socialists.

"These people are getting more aggressive about being Zionist," said David Ricci, a politics professor at Jerusalem's Hebrew University who took part in the rally. "It's kind of new: they're saying a Palestinian state is in our interests."

SHOWING OBAMA

For Anat Maor, a former member of parliament for the small, left-wing Meretz party, the evening showed Israel's "peace camp" was still alive: "It's important to us to show that it's not just outside pressure. It is the voice of the people of Israel."

Reflecting scepticism about Netanyahu's good faith in saying he wants a "two-state solution" with the Palestinians, one man held a sign reading: "Barack Obama, Please Force Peace On Us". "I'm here because my country is being taken away from me" by the right, said Zohar Eviatar, a psychology professor at Haifa University, as she waved a blue-and-white flag.

Yonat, a 26-year-old youth worker, said as the national anthem concluded the rally on downtown Jaffa Road: "Originally Zionism is a left-wing ideology. The right has taken Zionism in a fascist direction but the flag and anthem are ours."

About 500,000 Jews, some citing a Biblical birthright, live in the West Bank and areas in and around East Jerusalem that Israel captured in a 1967 war. Palestinians want to establish a state in the West Bank, East Jerusalem and the Gaza Strip.

While opinion polls continue to show mainstream support for a two-state solution outweighs opposition to handing over occupied land, voters deserted left-wing parties in droves after a Palestinian uprising began in 2000. They have yet to recover.

The long dominant Labour party of state founder David Ben-Gurion and the late, peacemaking premier Yitzhak Rabin has had just 13 of 120 seats in parliament since the election last year that brought Netanyahu's right-wing Likud back to power.

Many on Saturday wore blue T-shirts bearing the faces of Ben-Gurion and Rabin, who was assassinated at a peace rally in 1995 by an Israeli rightist. They heard Achinoam Nini, a singer who also performed on the night Rabin was shot, tell them from the platform: "We must take our fate in our own hands."

Netanyahu, pressed by the Obama administration, last year dropped his outright opposition to a Palestinian state. But few analysts believe the conflict is close to resolution, despite a resumption of negotiations this month via U.S. mediators.

Settler leader Danny Dayan scoffed: "The total failure of the new, united left movement to bring out more than a handful of demonstrators ... proves once again that the overwhelming majority of Israelis recognise that the Jewish residents of Yesha (the occupied territories) are true Zionists."

With a dose of self-deprecating humour on behalf of the ageing baby-boomers and idealistic youngsters gathered to fly the flag of Israel's left, politics professor Ricci said: "This is group therapy. It's important that people come out and know that there are other people like me and that it's not all over."