Israel celebrated its 60th birthday with barbecues and military display yesterday but the party was marred by an investigation that could unseat the Prime Minister and derail efforts towards a peace it has never known.

Blue-on-white Star of David flags fluttered from cars, rooftops and balconies, fighter planes traced "60" in smoke trails across the sky, paratroopers dropped into the sea and a televised youth Bible quiz highlighted the place Jewish faith holds in a state mainly founded by secular Zionists.

War or the threat of it has clouded every day for Israelis since David Ben-Gurion declared their state in 1948 that was destined to be a haven for survivors of the Nazi Holocaust.

Yesterday, families gathered to focus on the positive and on national pride. "It's an emotional day," said Tzviya Gilboa, 57, among vast crowds packing sunny beaches at Tel Aviv. "Anything that is connected to Israel is exciting to me."

While Israelis partied, Palestinians held a solemn march in Bethlehem to mark the nakba, or catastrophe, of the Jewish state's creation, when about 700,000 people, half the Arab population of Palestine, fled or were driven from their homes.

Holding banners vowing never to give up their "right to return" to land now part of Israel, protesters rallied around a 10-metre-long key, a symbol of the dream to reclaim lost homes.

"It hurts me dreadfully to see Israel celebrating because of our suffering, our expulsion and the loss of our homeland," said Monther Amireh, as Israeli planes roared overhead. In northern Israel, thousands wearing black armbands and waving Palestinian flags rallied at a site where an Arab village once stood. It is now a Roman-era archaeological site.

Founded on the basis of Jewish claims to biblical land and as a haven for survivors of European persecution that culminated in the Holocaust, Israel declared independence on May 14, 1948.

Israelis celebrate the day according to the Jewish calendar.

Fireworks, light shows and military fanfare launched celebrations on Wednesday night and Prime Minister Ehud Olmert, who is pursuing a deal for a Palestinian state alongside Israel, said the Jewish state craved an end to the decades-old conflict.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.