Mr Sharon tried to avoid this vote, but failed
Israeli Prime Minister Ariel Sharon has suffered a major setback at the hands of his Likud party with a vote to tie his hands in future peace negotiations.
It is a major defeat for Mr Sharon who, in the past, has publicly acknowledged the possibility of a Palestinian state.
It also throws into jeopardy the whole question of how any meaningful dialogue can be resumed with the Palestinians.
First election salvo
The proposal had been tabled by supporters of the former Prime Minister, Binyamin Netanyahu.
This marks the first step in his bid to regain the party leadership ahead of next year's general election.
The vote shows that there is a very strong section in the Likud party which is very strongly opposed to any concessions with the Palestinians.
Although this is a blow to Mr Sharon, there are questions about how binding this vote will be on him.
He is head of a government coalition which includes members of the centre-left Labour Party and other minor parties, as well as Likud.
Some of his supporters have been suggesting, therefore, that Mr Sharon must continue to negotiate as in the interests of the whole state of Israel, not just according to one party's view.
'Slap in the face'
But it is another blow to the Middle East peace process, after Mr Sharon won praise for his decision to hold off on a planned military offensive against the Gaza Strip.
Statehood is at the centre of Palestinian demands.
This was recently recognised by the US President, George W Bush and is also a central plank of the Saudi peace plan.
Responding to the vote, the chief Palestinian negotiator, Saeb Erekat, said it was a slap in the face for President Bush.
The vote "unmasked many things", Mr Erekat said. "This just shows that the war being waged by Israel against the Palestinians is not a war against what they call terror, it's really their war to maintain the occupation of the West Bank and Gaza."