Maj. Roi Klein was posthumously awarded the Medal of Valor for saving the lives of his fellow soldiers when he jumped on a grenade thrown by Hezbollah operatives during the 2006 war.
The court Monday gave the state four months to conduct hearings for residents living in houses in the Hayovel outpost of the Samaria settlement of Eli, where Klein's family lives, the Israeli newspaper Maariv reported Tuesday.
Klein's wife Sarah, who lives with her two children in a house built by her husband, refused to comment on the court decision, the newspaper said.
The court ruling came in the wake of a petition filed by human rights groups Peace Now and Yesh Din in 2005 demanding the homes be demolished.
Residents of the hilltop community southeast of Eli told the newspaper their neighborhood appears in the settlement's master plan, and the first buildings were constructed in 1998. The Ministry of Housing assisted in building the infrastructure and some of the homes to be demolished were built by the Jewish Agency, they said.