Mr Peres told Mr Powell Israel knew Zeevi's killers
Foreign Minister Shimon Peres told the US Secretary of State, Colin Powell, in Washington that his country had no choice but to stay in the towns occupied last week.
But Mr Powell repeated the US demand for an immediate withdrawal, a position President George W Bush is expected to reiterate personally when he drops in on a meeting between Mr Peres and US national security adviser Condoleezza Rice later on Tuesday.
In the territories themselves, two Palestinians were killed in an Israeli tank attack on Tuesday.
"We don't intend to remain," Mr Peres said after his talks with Mr Powell. "We are not trying to occupy or control the Palestinians."
But, he added, there could be no withdrawal until the killers of Israeli Tourism Minister Rehavam Zeevi were arrested and extradited to Israel for trial.
"The secretary understands that," the Israeli foreign minister said.
A spokesman for Mr Powell, Richard Boucher, said that the Israeli military presence contributed to "an escalation of violence".
Arafat under pressure
Another Israeli minister, Danny Naveh, said Israel's use of troops to fight its enemies was as justified as Washington's in Afghanistan.
"For us, the fight has sprung up just a few miles from Israeli cities," he said.
The BBC's Paul Anderson in Jerusalem says Palestinian leader Yasser Arafat cannot realistically meet the Israeli demand to hand over the suspected killers of Zeevi.
Mr Arafat would be "signing his own death warrant if he surrendered his own people to Israeli justice", our correspondent says.
Under US pressure to rein in militants, Mr Arafat has outlawed the military wing of the Popular Front for the Liberation of Palestine, the group that has claimed responsibility for the Zeevi killing, but Palestinian officials have ruled out any extraditions.
New deaths
An Israeli tank opened fire near the town of Tulkarem on Tuesday, killing two Palestinians. The Israeli army said it had been fired upon.
At least 30 Palestinians and one Israeli have been killed since the assassination of the Israeli tourism minister on 17 October.
On the same day as thousands of Palestinians attended the funeral in Nablus of senior Hamas bomb-maker Ayman Halaweh, believed assassinated by Israel, an Israeli army bulldozer team demolished the house of a suicide bomber in Qalquiliya.
The bomber, Said Hotari, was responsible for the deaths of 22 young Israelis at a Tel Aviv disco in June.
Amid the violence, the EU's top foreign envoy, Javier Solana, continued his own negotiations with Israeli and Palestinian officials.
Speaking before talks with Israeli Prime Minister Ariel Sharon, he said that "tanks in the streets" did not help.
But, he added, "it is also very difficult for the Israelis to see one of their ministers killed, assassinated, and the perpetrators not found".