Thousands of other Palestinian expatriates who have been living in the West Bank for years, many of whom have raised families there, face a similar threat of de facto expulsion. Their only apparent hope for reprieve lies in the uncertain prospect of an improvement in Palestinian-Israeli relations from the planned formation of a Palestinian national unity government to replace the cabinet dominated by the radical Hamas movement that resigned last week.

After years of allowing the Palestinian expatriates to enter and leave the West Bank on tourist visas, Israel began denying them re-entry earlier this year. Israel's interior ministry played down the change, describing it as 'a refreshment of procedures'.

But Shlomo Dror, spokesman for the army's Co-ordinator of Activities for the Territories, has confirmed that the mounting number of exclusions reflects a new policy under which 'thousands' of expatriates will have to leave the West Bank. Occupied by Israel during the 1967 war, the West Bank is home to 2.4 million Palestinians. Four hundred thousand Israelis settlers live there in violation of international law and the government of Prime Minister Ehud Olmert continues to encourage more Israelis to arrive and expand settlements.

'From our point of view, and legally, these people are not Palestinians,' Mr Dror said.

'They are people who have another nationality, who have foreign passports. They came in as tourists. They knew they weren't doing things exactly according to the law. We weren't really checking in the past. Maybe our mistake was that we didn't stop this at the beginning. No country would allow this.'

Dozens of businessmen, some of them key economic players, have already been shut out, turned back at border crossings in a policy critics say breaks up families and undermines the Palestinian middle and upper classes.

'This is one of the more blatantly unjust and blatantly stupid things the government of Israel has ever done,' said Gershon Baskin, Israeli co-director of the Israeli-Palestinian Centre for Research and Information.

Samir Abdallah, director of MAS, the Palestinian Economic Policy Research Institute, in Ramallah, said: 'These expatriates are really important to the economy. They are highly skilled people who can facilitate communication with international agencies, donors and clients. They play a bridging function between local communities and institutions and the rest of the world.'

Yossi Alpher, former director of the Jaffee Centre for Strategic Studies in Tel Aviv, said a 2000 freeze on granting residency for reasons of family reunification and the new re-entry strictures constituted 'deliberate pressure' on the Palestinian government. He said that for Israeli policymakers, the underlying motivation was demographic - to change the population balance in the West Bank in Israel's favour.

'Officials see this as a way to reduce the number of people [in the Palestinian areas],' Mr Alpher said.

Mr Bahour, whose father comes from Ramallah's twin city, al-Bireh, grew up in Youngstown, Ohio, where he also went to university. After he graduated, he worked in software development in the US before deciding that, with the start of Palestinian self-rule in 1994, he wanted to contribute to building the economy of the future Palestinian state. Mr Bahour said he decided 'to walk the Palestinian walk, not just talk the Palestinian talk', moving with his wife and a daughter to al-Bireh in 1995 and helping launch the Palestinian phone company Paltel.

He went on to establish the first information and communication technologies-specific consulting firm in the Palestinian territories, Applied Information Management. In 2003, despite Israeli jeep patrols in Ramallah, Mr Bahour opened the Plaza Shopping Mall, the first US-style mall in the West Bank, complete with a children's play area, a food court and a Benetton.

'Historically, there was no marketing and retailing here,' he said. 'Plaza provided a live ground for people to turn the theory they were learning in university business studies into practice.'

His latest endeavour is the Campaign for the Right of Entry/Re-entry to the Occupied Palestinian Territory, through which he and other activists are trying to overturn the new Israeli policy.

Mr Bahour said he never wanted to be on a tourist visa. His wife, Abeer, is from the West Bank and he applied to Israel for residency under family unification in 1994. His request was still pending, he said.

Mr Bahour's children, Areen 12, and Nadine, six, both of whom have residency because of their mother, have just started the school year in Ramallah. 'I am trying to shield them as much as possible from this sadistic Israeli policy,' Mr Bahour said.

Expatriate activists say a clear pattern of population transfer had already begun to emerge.

First, the expatriate is turned away at the border. Then, after a few months, the spouse and children move abroad to be with them. 'This sucks out whole families' said Anita Abdullah, a Swiss national married to a Palestinian. She said she feared not being allowed back into the West Bank if she left to visit her mother in Switzerland.

'I married a Palestinian, my children are Palestinian,' Ms Abdullah said. 'That was always the reason I gave the Israelis at the borders. Suddenly, this has become a crime. You have to hide it. You become a liar even though you don't want to be.'

Thousands of people have overstayed their visas rather than leave the country and risk being denied re-entry, according to the campaign.

The policy change has elicited scant response, at least in public, from the international community. The US has asked Israel why US citizens of Palestinian origins are being denied entry to the West Bank at the rate of up to 12 people a day, according to Mohammed Husseini, an official at the US Consulate offices in East Jerusalem.

British officials, meanwhile, have been questioning cases in which British and other nationals funded by the British government as consultants for projects in the West Bank have been denied entry, according to Victoria Billing, a spokeswoman for the British Consulate in East Jerusalem. 'There is a general tightening on lots of different categories of people,' she said.

Mr Dror, the Israeli official, said consultants were turned away only for security reasons. He blamed the Palestinian Authority for the plight of the expatriate Palestinians, saying it had not made gaining residency for them a priority as part of the family unification quota before 2000, when Israel froze family reunification.

When Hamas, whose charter calls for Israel's elimination, rose to power after its stunning electoral victory in January, Israeli contacts with the Palestinian government were cut off. But if the Palestinian national unity government was formed and recognised Israel's right to exist, contacts would be renewed and the plight of the expatriates could then be discussed, Mr Dror said. 'There are many questions we have to solve and the only way we can do something is by sitting together with the Palestinians,' he said. 'We have to wait and see if something will change in the Palestinian Authority.'

Mr Alpher, the Israeli analyst, predicts that Israel's stance towards the new government will depend on whether its political platform comes 'anywhere close' to addressing the three conditions for relations set by the Middle East peacemaking quartet of the US, the European Union, Russia and the UN. The conditions are that the government recognise Israel, renounce violence, and adhere to previous Israeli-PA agreements. 'My sense is that the quartet will be looking to relax the rules and that Olmert will be less inclined towards a relaxation,' Mr Alpher said. 'There could be some friction over this.'

Mr Dror denied that the visa crackdown would have much economic impact. 'The real economic effect is due to the peace process and when there is no peace process the economy will continue to be very bad. For the Palestinians, the economic problem is less important than continuing the fighting.'

Hanna Quffa, a US-educated accountant who runs a consulting and auditing company in Ramallah, said he was worried about taking an upcoming business trip. 'Do I get back in or not? That question is always in the background. It's a risk to leave the country. I can't understand the Israeli policymakers,' said Mr Quffa, who set up the Ramallah office of international accounting firm Ernst and Young in 1994 and ran it for 10 years.

'We are talking about people educated in the west, who are trying to build something here. If there is a possibility for peace and reconciliation, these are people you want to be talking to, not excluding.'