Israeli officials say ministers are expected to endorse the agreement on Wednesday.

The new interim peace deal agreed in the United States last month had been set to come into effect on Monday.

However, Tel Aviv put off discussions about the agreement until the Palestinians gave the Americans their proposals to combat violence against Israel on Monday.

Arafat: Agreed delay

Washington says the agreement is on course, despite a further delay - agreed by the Palestinian leader Yasser Arafat - to allow the Israeli Parliament to ratify the deal next week.

An aide to Mr Arafat, Dr Ahmed Tibi, said the Israeli Prime Minister, Binyamin Netanyahu, had phoned to the Palestinian leader to explain what he called a technical delay.

Steve Gibbs: Hebron settlers press ahead with expansion

Dr Tibi said that there was nothing in the agreement that called for ratification by Israel's government or cabinet, but the Palestinians did not want to give Israel any excuse for not implementing the deal.

Middle East Correspondent Paul Adams: First Israeli troop withdrawals likely to be delayed

A spokesman for Mr Netanyahu, Aviv Bushinsky, said implementation of the Israeli handover of another 13% of the West Bank remained conditional on the Palestinian Authority fulfilling its security commitments.

Middle East correspondent, Paul Adams, says that both sides seem to recognise that some slippage from the original timetable is inevitable as they endeavour to implement the deal.

Hebron expansion raises tension

The Israeli Government says it has got nothing to do with the timing of work to build 200 new homes in Kiryat Arba, a Jewish settlement on the outskirts of Hebron, which began this week.

The settlement is in volatile area

Prime Minister Netanyahu's spokesman said plans to expand Kiryat Arba have been on the table for some time and said the timing of construction was a technical matter.

The site at Kiryat Arba is in one of the most sensitive areas of the West Bank, lying on the edge of the divided city of Hebron, which is often a flashpoint for violence.

Mr Netanyahu has long insisted that expansion of existing settlements does not violate any understandings or agreements reached with the Palestinians.

BBC's Jeremy Bowen: "Instability always follows progress in peace talks"

Both sides have pledged to avoid unilateral actions which could jeopardise the peace deal - but the Palestinians regard building work in disputed areas as Israeli provocation.

The start of construction will also bolster Israeli government efforts to appease hard-line critics of the peace deal, who have threatened to topple Mr Netanyahu's government.

Ras al-Ahmoud clash

Meanwhile, Israeli police scuffled with a senior Palestinian official at another Israeli construction site in Ras al-Amud, a Palestinian neighbourhood in east Jerusalem.

Israeli soldiers restrain a Palestinian after a scuffle at Ras al-Amud

The disputed site is owned by an American millionaire Irving Moskowitz, who plans to build 132 homes for Jews in the area.

The senior Palestinian Authority official in Jerusalem, Faisal Husseini, arrived at the site on Monday, ringed by several bodyguards, to try and stop the work.