Israel's security cabinet has approved a policy to compensate Jews who leave settlements in the Gaza Strip.
Sharon is feeling squeezed by his own side over Gaza disengagement
Families will reportedly receive $200,000-$500,000, with part of the sum being paid as early as next week to those settlers who volunteer to leave.
The measure is part of Prime Minister Sharon's plan to withdraw settlers from Gaza and four West Bank enclaves.
Thousands protested against the pullout two days ago, and cabinet pressure is growing for a referendum on the plan.
The security cabinet, which includes Ariel Sharon's most senior ministers, voted 9-1 in favour of the compensation plan after what was described as a stormy meeting.
Correspondents say it is the government's first concrete step towards implementation of Mr Sharon's disengagement plan, and shows his determination to forge ahead despite opposition among his traditional supporters.
Welfare Minister Zevulun Orlev, a member of the far-right pro-settler National Religious Party, was the only dissenting vote.
Last night the NRP
threatened to leave the Mr Sharon's coalition if parliament approves the Gaza plan and the prime minister does not put it to a national referendum.
Threat to Arafat
Earlier Mr Sharon used a series of national newspaper interviews on the occasion of the Jewish New Year to reject a call for a referendum voiced by the powerful finance minister, Binyamin Netanyahu, on Monday.
"The real intention here is to delay implementation [of the disengagement plan]," Mr Sharon said.
Sharon - once the father of settlements - is now called traitor
"It will be implemented without delay. We cannot deviate by even one day from what the cabinet decided," he added.
Mr Sharon's holiday interviews also pledged to expel Palestinian leader Yasser Arafat - when it was "convenient" for Israel - and hinted at a possible assassination attempt.
"Just as we acted against other murderers, so we will act with Arafat," he said.
Jewish settlements in Gaza and the West Bank are considered illegal under international law and Israel has committed itself to freezing settlement activity under the international peace plan known as the roadmap.
About 8,000 Jews live in 21 settlements in the Gaza Strip, alongside 1.3 million Palestinians.
Israel is planning to pull all its settlers from Gaza and the troops that protect them as part of a disengagement plan. Israel will maintain control of Gaza's borders, coastline and airspace. Four West Bank settlements are also to be evacuated.
Polls have consistently shown that the prime minister's plan to withdraw from Gaza is backed by most Israelis.
However, settler organisations are strongly against the pullout and Mr Sharon has twice lost contests within his own Likud party over it.
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