Between December 1995 and March 2000, Israel used an additional method to attain its demographic objective. The Interior Ministry, which deals with the residency status of East Jerusalem's Palestinian residents, revoked residency from those who moved outside Jerusalem's municipal borders. Palestinians who were unable to prove that they had lived in Jerusalem in the past and continue to live there were compelled to leave their homes forever. They could not live or work in Israel and they and their families lost their social benefits. The Israeli authorities never announced this policy, and never warned Palestinians that by leaving Jerusalem they were jeopardizing their status and right to return to live in their homes in the city.

The policies of the Israeli government and the Jerusalem Municipality in a variety of spheres led thousands of Palestinians to leave the city, many to reside in Jerusalem's suburbs, others in the West Bank and Jordan. Until 1995, moving outside the city limits did not affect their status as permanent residents in Israel. They maintained this status as long as they returned to Jerusalem to renew their exit permits at the Ministry of the Interior, which regularly renewed the permits. Only a continued stay of more than seven years outside Jerusalem without having renewed their exit permits was liable to lead to revocation of residency status. Palestinians who moved to Jerusalem's suburbs or elsewhere in the West Bank did not require exit permits and could live there for years without it affecting their status.

In December 1995, without forewarning, the Ministry of the Interior changed its policy. The Ministry claimed that permanent residency, unlike citizenship, is a matter of the circumstances in which the individual lives, and when these circumstances change, the permit granting permanent residency expires. Thus, every Palestinian who lived outside the city for a number of years lost their right to live in the city, and the Ministry ordered them to leave their homes. The fact that they had returned to Jerusalem over the years and the Ministry regularly renewed their exit permits and granted them additional services was insignificant. The Ministry demanded proof that their "center of life" was in Jerusalem. The standard of proof was high, and the Ministry required that the individual provide numerous documents. According to official sources, permanent residency of more than 3,000 individuals "expired" since December 1995.

In March 2000, the Minster of the Interior, Natan Sharansky, submitted an affidavit to the High Court of Justice in which he stated that the "quiet deportation" policy would cease. The affidavit stated that the Ministry would return to operating according to the pre- December 1995 policy: all residents of East Jerusalem who renewed their exit permits on time would maintain their permanent residency status, even if they live in Jordan or in another country. Also, permanent residency status would not be revoked from Jerusalem residents who moved to Jerusalem's suburbs or elsewhere in the West Bank and do not require exit permits. The Minister also stated in his affidavit that residency would be returned to those whose status had been revoked, provided that they lived in Jerusalem for at least two years.

In addition, the Ministry reinstated the residency of hundreds of Palestinians whose residency had been revoked during the years that Israel implemented its revocation policy.

However, in recent years, the Ministry has once again begun to revoke permanent-residency status of East Jerusalem Palestinians, raising the concern that, covertly and without warning, Israel has returned to the “quiet transfer” policy. According to official figures, in 2005, the Ministry revoked the residency of 222 Palestinians. In 2006, that number jumped to 1,363, an increase of more than 600 percent. In response to B'Tselem’s inquiry, the Ministry stated that, in most of the cases, residency was revoked because the person had become a citizen or permanent resident of another country.