First, the question in what is holding back Israel breaks the 20-year rule. Luckily, the present situation developed prior to 20-years ago (or the framework of it did, anyway).

So after '67, Israel did occupy the entirety of the West Bank and Gaza, along with the Golan (which is mostly an unrelated situation)--Jordan and Egypt had previously been in various states of occupation there. After the war, the entire area was under Israeli military administration.

That changed around 20 years ago. The First Intifada in the late 80s and early 90s was the first mass Palestinian action against Israeli occupation of the territories specifically. The result was the Oslo Accord, the first part of which was agreed to in 1993.

The basic premise of this was that the Palestinian Authority would have partial sovereignty over certain areas, which would eventually be part of a move towards a Palestinian state. This was the "roadmap to peace"--Oslo I began a planned transition to Palestinian independence. Israel then de-occupied certain areas, and ceded authority to the PA. This began with Gaza and Jericho, but later extended to other parts of the West Bank (which is what's within the 20-year rule).

Essentially, the question isn't why Israel doesn't occupy the whole thing--the question is why Israel disengaged from certain areas. And that occurred as part of the early 90s peace process.

Could you perhaps clarify what you mean?

Israel is already occupying all of what are considered to be the Palestinian territories i.e. the West Bank and the Gaza Strip. They seized them from Jordan and Egypt respectively during the Six-Day War in 1967.