Israel to leave Palestinian town

Tensions are high across the Palestinian territories

Israel says it will withdraw its troops from Beit Jala in the West Bank if Palestinian gunmen observe a ceasefire.

Troops entered Beit Jala on Tuesday in retaliation for Palestinian attacks on the nearby Jewish settlement of Gilo.

I hope that in the night, the army can go home and that Jerusalem can live in peace

Israeli Foreign Minister Shimon Peres

The decision to pull out follows a European Union-brokered ceasefire after Britain and the United States strongly condemned the incursion.

However, the ceasefire appeared to be in doubt after new shooting erupted around Gilo and in the Gaza strip after Israeli tanks took control of roads around the town of Rafah.

Israeli Foreign Minister Shimon Peres spoke several times during the day with Palestinian leader Yasser Arafat, who is reported to have ordered his security forces to stop firing in the Beit Jala area.

"I hope that in the night, the army can go home and that Jerusalem can live in peace," Mr Peres told Israel radio.

Carnage continues

The shooting spread through the streets of Beit Jala, where Palestinian gunmen exchanged heavy machine-gun fire with Israeli troops.

Israeli Prime Minister Ariel Sharon's spokesman, Raanan Gissin, said the pullout would take place only "if there is a cessation of all forms of shooting towards Jerusalem".

At least four Palestinians and one Israeli are reported to have died in separate incidents on Wednesday. One was a member of Mr Arafat's elite guards, shot by Israeli troops in Hebron.

Israeli tanks destroyed Palestinian police posts and the army set up road blocks in the Gaza strip during the operation in Rafah, which the Palestinians called a re-occupation.

The area was handed over to Palestinian control in 1994. The army said it was operating in Israeli-controlled territory, possibly referring to military buffer zones beside main Gaza roads outlined in peace agreements.

Policeman killed

A Palestinian policeman was shot dead during the operation, which was apparently in response to Palestinian shooting at an Israeli army post.

Israel needs to understand that incursions like this will not solve the security problems - they only make the situation worse

US State Department spokesman

The move came after the army moved into the West Bank town of Beit Jala and vowed to stay until Palestinian shootings stopped.

Palestinian forces exchanged fire with Israeli troops in Beit Jala and the neighbouring refugee camp of Aida on Wednesday morning.

Israel said it moved into Beit Jala to prevent Palestinian attacks on Gilo.

But at least two shells were fired at Gilo from Beit Jala on Wednesday, in what the BBC's Barbara Plett in Jerusalem says is a sign the strategy is not working.

'No choice'

Israeli officials say the army will not stay in Beit Jala indefinitely, but it is already the longest incursion into Palestinian territory since the intifada began in September last year.

"If the Palestinians continue with the escalation of the situation, then we won't have any choice" but to stay, one Israeli minister, Limor Livnat, said on Wednesday.

Separately, Jewish gunmen were reported to have shot dead a Palestinian and wounded two others on Wednesday, while an Israeli truck driver was shot dead near the Palestinian city of Nablus.

At least two different militant Palestinian groups have said they killed the Israeli driver.

Washington has called for Israel to pull its troops out of Beit Jala, but Israeli public radio reported that officials had decided the army would stay put because of the continuing shooting.

As well as criticising Israel, US State Department spokesman Richard Boucher called on the Palestinians to exercise restraint: "The Palestinians need to stop the shootings and attacks against Israelis in Gilo and elsewhere."

Nearly 700 people - the majority of them Palestinians - have died in 11 months of fighting since the collapse of peace talks.