A sixth person has been killed since the ceasefire came into force five days ago - a Jewish settler shot in a drive-by shooting near the West Bank city of Nablus on Monday.
Prime Minister Ariel Sharon, known as a hardliner on security issues, has rejected a proposal that the more conciliatory Foreign Minister, Shimon Peres, meet Mr Arafat.
Mr Sharon's spokesman attempted to downplay the alleged rift on Monday, a day after the two men disagreed in a Cabinet meeting.
The spokesman, Raanan Gissin, said Mr Sharon and Mr Peres had patched up their differences over dinner.
UN initiative
The talks between Mr Peres and Mr Arafat had been suggested by UN Secretary-General Kofi Annan, who met leaders on both sides last week to try to bolster their fragile ceasefire.
But Mr Sharon ordered Mr Peres not to take part in a three-way meeting while violence continued, saying it would be construed by the Palestinians as weakness.
A sixth person has been killed since the ceasefire came into force five days ago - a Jewish settler shot in a drive-by shooting near the West Bank city of Nablus on Monday.
On Sunday a Palestinian boy was shot dead during a stone-throwing protest in Gaza.
The Israeli army said Palestinians fired two mortars in the Gaza Strip on Monday.
Israeli security officers discovered two bombs in the nothern city of Haifa on Sunday night, reportedly the first bombs discovered in Israel proper since the ceasefire came into effect on Wednesday.
Israeli sources reported that another two bombs were discovered on Monday. One was defused and three were destroyed in controlled explosions.
Palestinian officials angrily criticised the Israeli prime minister's rejection of Mr Annan's proposal.
Palestinian Information Minister Yasser Abed Rabbo released a statement saying: "This rejection by Mr Sharon of holding such a meeting is a clear indication of his opposition to any political solution with the Palestinian people."
Different approaches
The dispute between Mr Sharon and Mr Peres is a reflection of their differences of approach to the peace process.
Mr Peres said it was only natural he would disagree with the far more right-wing Mr Sharon at times.
But in less conciliatory remarks, the foreign minister is also reported to have said that he is not a clerk who takes orders from Mr Sharon.
Mr Sharon refused to countenance a meeting with the Palestinian leader until the violence had ended completely, an official in his office said.