One night eight years ago in Ramallah, on the West Bank, a group of Israeli peace activists gathered at Yasser Arafat's home to stage a sit-in. Ariel Sharon, Israel's hardline prime minister, was suspected of having despatched a team to kill the Palestinian leader, and the activists saw their plan as the only way to deter the assassins. Through the night, they talked with Arafat's bodyguards, trying to think about anything but the important things. In the end, no assassins came and a crisis was averted.

Adam Keller was one of the Israeli activists at Arafat's house that night. In the years since, he has pursued peace tirelessly through the group Gush Shalom ("Peace Bloc"), but now he is running low on optimism. "The moderate, mainstream left is broken," he says, in his tiny sitting room in southern Tel Aviv. These days, Gush Shalom cannot even scrape together the funds to print the newsletter it used to publish each month. "Israeli public opinion has given up on peace," he tells me.

If there is hope for Israel's liberals, it lies in East Jerusalem. Each week, under the watchful eyes of riot police armed with assault rifles, Israeli activists bang drums and blow whistles to protest against the eviction of Palestinian families from their homes by Jewish "settlers". The police's heavy-handed response has swelled this small pocket of resistance to a couple of thousand people. Yet nearly 30 years ago, as many as 400,000 Israelis marched in fury at the massacre of Palestinians at Sabra and Shatila refugee camps during the war in Lebanon. In 1995, thousands took to the streets after the then prime minister, Yitzhak Rabin, Israel's best hope for peace in years, was assassinated by a right-wing renegade at a public rally.

Many Israelis have been worn down by fruitless talks and promises. "There's such total indifference," says Daniel Levy of the New America Foundation, a Washington think tank. "Support for a two-state solution doesn't mean anyone is willing to do anything about it."

At a Peace Now rally in Tel Aviv against the right-wing coalition government of Binyamin Netanyahu and Ehud Barak, a rock band attempts to lift the mood of a downbeat crowd. "These are dangerous people with dangerous politics - taking us down a path of no return," Peace Now's secretary general, Yariv Oppenheimer, shouts to scattered applause. "Israel was a wonderful place, but the government
destroyed everything," says Nitza Stern, a protester in her fifties.

The government's lacklustre efforts to relaunch peace talks with the Palestinians and limit the construction of Jewish settlements on the West Bank have angered liberals, and recently Netanyahu has dismayed even his supporters. By announcing the construction of new homes in East Jerusalem during a visit by the US vice-president, Joe Biden, he has brought relations between Tel Aviv and Washington to their lowest point in years. As a result, his party, Likud, has suffered in the opinion polls. But it retains its core support. Analysts say Israel's electorate has shifted rightwards following a wave of Russian immigration and a population explosion among the ultra-Orthodox community. The left-wing Meretz, once the third-largest party, now holds just three out of 120 seats in the Knesset.

Partner for peace

Many blame the left's demise on Barak. When he first brought the centre-left Labour Party to power in 1999, hopes for peace were high. But the state he offered Arafat fell far short of Palestinian expectations, and he announced that Israel had "no partner for peace". Months after Barak's election, the second Palestinian intifada began. Faced with failure, many began to turn away from the left, and Barak's decision to form an alliance with Netanyahu's conservative government last year did little to bolster his popularity among liberals. "Barak is the serial murderer of the Israeli peace camp," Levy says.

But some argue that the damage was done years earlier. Israel's so-called left was busy with nation-building and never provided an adequate explanation of what it meant to be a progressive Israeli state.

“The left had no ideological response to the question put by the right," says the political scientist Ze'ev Sternhell, a member of the peace camp who escaped with light injuries after a right-wing settler planted a makeshift bomb outside his Jerusalem home two years ago. "Why was it legitimate to settle the upper Galilee, the Lebanese border and the Jordan Valley, and why wasn't it legal and good to settle the West Bank?"

Following the UN report on the Gaza war of December 2008 and January 2009 which accused Israel of war crimes, some commentators in the country are questioning their values. Meanwhile, the right-wing Im Tirtzu group has launched a media smear campaign against the New Israel Fund (which offers funding to NGOs challenging the behaviour of Israel's security forces), featuring a caricature of the fund's head, Naomi Chazan, sprouting a horn.

Moderate Israelis are understandably worried. But they may yet see some redress. Dismayed by the hardline stance of some cabinet members in response to US demands, Labour is threatening to pull out of the coalition government unless the centrist Kadima party is brought in. The intransigence of Likud's right wing may yet be the catalyst for a coalition that would otherwise have been unthinkable.

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