Most of the Palestinian arabs who live in the Gaza Strip are defined as "refugees" eligible for UNRWA help, under international law.
Since a refugee -- by definition -- is not living in his permanent home, this means that they are living in temporary quarters.
That being the case, there is no justification for settling them permanently in areas west of the Jordan River (e.g., in the West Bank or in Gaza). They should be settled permanently in Jorday, or Syria, or Egypt, or Lebanon, or in other Muslim areas.
As for the other non-Israeli citizens who live in the Gaza Strip and the West Bank, in my opinion they can be offered Israeli citizenship or retain their Jordanian or Egyptian citizenship. However, if they act in ways that are inconsistent with the peaceful existence of Israel, they should be deported to their own countries as enemies of the state.
Simple, really.
I'm afraid it is too simple. Even Israel does not claim the West Bank or Gaza is Israel.