On a windswept slope of Mount Gerizim, the Israeli government celebrated Independence Day today by dedicating another new Jewish settlement in the occupied West Bank.

Several thousand members of the country's Peace Now movement protested at the ceremony and were kept separated from a smaller group of West Bank settlement advocates by a line of Israeli soldiers.

The dedication marked the conversion of a small, existing military encampment into a civilian settlement, the Hebrew name of which means "blessing" and which is also referred to as "Upper Nablus."

Israel has converted dozens of military camps into civilian settlements, a standard technique used to expand the Jewish presence in the West Bank. But the dedication of Bracha was considered a deliberately provocative act by critics of the government's policy both because of the location of the settlement and the timing of the ceremony.

The settlement, which will be the home of 15 Jewish families at the outset, is located about five miles south of Nablus, the largest and most nationalistic Palestinian city in the occupied territory. In addition, leaders of the opposition Labor party criticized the use of Independence Day--a celebration of national unity--for a ceremony underscoring perhaps the most divisive issue facing the country.

The government shrugged off the criticism, although both Prime Minister Menachem Begin and Defense Minister Moshe Arens found reasons not to attend today's ceremony. Instead, Housing Minister David Levy dedicated Bracha at a private ceremony inside the encampment and slipped away by helicopter without speaking to the nearby crowd.

Pelted by intermittent rain and hail, the rival groups separately danced and sang folk songs while waiting for a public ceremony that never took place.

"Building new settlements, especially here, is one of the biggest obstacles to peace," said Rahael Benziman, a Peace Now member, explaining why she and others rode buses from Jerusalem and Tel Aviv to protest at the ceremony. "By building more and more, peace is getting further away."

Yemima Sela, a member of the nationalistic Gush Emunim movement, drove from the Tel Aviv area with her husband and six children to show support for the settlement. She said she hoped her children would some day live in the West Bank.

"The difference between Peace Now and Gush Emunim is that they talk and we do things," she said.

Scott Alboher, a 25-year-old New York lawyer and recent arrival to Israel, said the dedication of Bracha "is a message to the world that we're back after 2,000 years. We're back by the city of Shechem the Hebrew name for Nablus . Hopefully, in a few months we'll be in the city of Shechem. It is a message to the world that we are here to stay."