Israel 'completes' military stage

Palestinians line up at a checkpoint on their way home

Israeli Prime Minister Ariel Sharon has said the first stage of Israel's offensive in the West Bank is over, but vowed that the campaign against militants would continue.

Mr Sharon's comments came hours after Israeli tanks and troops pulled out of the city of Nablus and most of Ramallah. They have now redeployed around West Bank cities.

We have achieved very profound results but the struggle against terrorism continues

Ariel Sharon

Israel has said troops will continue to surround Palestinian leader Yasser Arafat's compound in Ramallah and the Church of the Nativity in Bethlehem until wanted militants are handed over.

US Secretary of State Colin Powell welcomed the Israeli withdrawals but called for Israel to give Mr Arafat more access to the outside world.

He said Israel should allow Mr Arafat to exercise his authority and to try to persuade the Palestinian people on to a peaceful path towards a state of their own.

Mr Powell said he hoped to return to the Middle East in the near future.

Speaking to reporters, Mr Sharon said: "We have finished this stage of the operation called Defensive Shield," saying Israel had achieved "very profound results".

He said that "the struggle against terrorism continues," adding "this time, it will work according to a different method".

The operation started on 29 March after a wave of Palestinian suicide attacks killed and wounded scores of Israelis.

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It says it will continue to surround Mr Arafat's compound until he hands over three people suspected of assassinating Israeli Tourism Minister Rehavam Zeevi and a finance official accused of arms smuggling.

Mr Arafat has offered to put the three suspected assassins on trial, but not extradite them.

Israeli security officials were reported to be considering storming the compound to seize the wanted Palestinians.

According to reports from Israel, the government is considering cutting contact with UN Middle East envoy Terje Roed-Larsen.

UN mission

Israel was stung by Mr Roed-Larsen's comments after a visit to Jenin refugee camp, when he said it was "morally repugnant" that Israel had refused to let humanitarian workers into the camp for 11 days after fighting ended.

Israel has said it will cooperate with a UN fact-finding mission to determine what happened in the fighting.

But the government has reportedly said three senior UN officials should not be part of the team: Mr Roed-Larsen, Peter Hansen, who heads the UN relief works agency for Palestinian refugees, and the UN human rights chief Mary Robinson.

The Palestinians have accused Israel of committing a massacre - an allegation strongly denied by Israel, which insists the dead were mainly armed fighters.

Palestinians arrested

On Sunday, the Israeli army arrested a military official of Mr Arafat's Fatah group in a sweep for militants in Kalandia refugee camp on the West Bank, Palestinian and Israeli officials said.

Israel has continued rounding up Palestinian militants

Around 15 other Palestinians were also reported to have been arrested in the camp.

US President George W Bush has called on Israeli and Arab leaders to make "hard choices" to end their conflict.

In his weekly radio address to the nation, President Bush said Israel must continue pulling its forces out of Palestinian areas, but also said the Palestinian Authority must "act on its words of condemnation against terror".

The only long-term solution was for the sides to live side by side in security and peace, he said.

Bethlehem 'blackmail'

In his Sunday sermon, the Pope said there had been "blackmail and an intolerable exchange of accusations" at the Church of the Nativity.

He called on the international community to stop a "spiral of hatred and violence" in the Holy Land.

Israel has besieged the church since 2 April, demanding the surrender of about 35 armed fighters hiding inside among some 240 Palestinians.

Five Palestinians managed to break out of the Church late on Sunday but they are not thought to be fighters wanted by the Israelis.

Palestinians inside the church say they have run out of food and face starvation.