Israel demands peace before plan

Palestinians also responded cautiously to the outlining of a "road map to a Palestinian state", announced by senior officials from the United Nations, European Union, United States and Russia.

Delegates from Israel and the Palestinians will hold further meetings with members of the quartet on the fringes of the UN General Assembly in New York.

But outbreaks of violence continued in Israel and the West Bank, and a deal was announced for a $5m electronic fence to be built around Jerusalem.

Mr Sharon said the only hope for the latest peace plan put forward by the international community would be for the Palestinians to end all attacks and reform their security forces.

"For there to be progress, there must be an absolute end to terror and violence," he told a cabinet meeting.

Quartet plan
Phase 1 (2003): Palestinian elections, security reform, Israel pull back, humanitarian initiatives, security agreement
Phase 2: Palestinian state created
Phase 3 (2004-2005): Israeli-Palestinian negotiations on permanent status solution

The Palestinian leader, Yasser Arafat, said he saw Israeli troop withdrawals as the key beginning for reforms and moves towards peace.

"The most important thing is that we hope that [Israel] carries out an immediate and quick withdrawal so that we can start our electoral [programme] and reform programme," he said.

The new internationally-backed peace proposals envisage a three-stage process whereby Palestinian elections and security reforms are followed by Israeli troop withdrawals and then the creation of a Palestinian state.

Disagreements continue

Israeli Foreign Minister Shimon Peres and Palestinian delegate Nabil Shaath met the proponents of the plan at the United Nations in New York, but continued to disagree with each other over the way to achieve peace.

Mr Shaath said he was disappointed with the outcome of the long-awaited international plan, saying: "We believe that what was adopted by the quartet is not capable of getting us out of this crisis."

He offered a gradual ceasefire to Mr Peres whereby Israeli civilians living in Israel would not be targeted. But Mr Peres rejected that, saying it implied that it was permissible to kill soldiers and settlers.

Mr Peres said security issues had not been resolved and troops needed to stay in Palestinian areas for the time being to protect Israelis.

More than 2,000 people have been killed since the beginning of a Palestinian uprising nearly two years ago.

Victims found

On Wednesday, the burned body of an Israeli settler from Maale Adumim who had been shot in the head was found on a rubbish dump in an Arab suburb of Jerusalem.

The body of a Palestinian man suspected of collaborating with Israel was also found, in an olive grove about 15 kilometres (nine miles) north-west of Tamoun.

And Israeli troops shot dead a Palestinian man and wounded another in the village of Tamoun in the northern West Bank.

Israeli defence manufacturer Elbit Systems said it had won a $5m contract to build a "smart" electronic fence around Jerusalem.

The warning system - already in use at Israel's border with Lebanon and along part of the Gaza Strip - detects all entry attempts.

The 25-km (15-mile) long fence and alarm system will form part of a planned 50-km (30-mile) barrier between Jerusalem and the West Bank.