Israel’s prime minister is ready to sit down with the Palestinian president for continuous one-on-one talks until they reach a peace deal.

Palestinian militants Hamas stepped up their verbal attacks on President Mahmoud Abbas today on the eve of the US Middle East conference, saying his policies had failed and undermined prospects for statehood and unity.

The Palestinians are ready to yield parts of the West Bank to Israel if compensated with an equal amount of Israeli territory, according to the lead Palestinian negotiator.

The Israeli Cabinet today voted overwhelmingly to release 90 Palestinian prisoners in an effort to shore up the moderate Palestinian president, Mahmoud Abbas, in his power struggle with Islamic Hamas militants.

Israel should turn over Arab neighbourhoods in Jerusalem to the Palestinians as part of a peace deal with the moderate government of President Mahmoud Abbas, Israel’s deputy prime minister said today in some of the frankest remarks to date about what Israel might be willing to relinquish.

A group representing Israeli victims of Palestinian violence is mounting a court challenge against the planned release on Friday of 256 prisoners.

Israel is co-operating with the forces of moderate Palestinian President Mahmoud Abbas in Hamas-controlled Gaza to bring humanitarian aid into the impoverished coastal strip.

The US decision to end an economic and political embargo on the Palestinian Authority increased pressure for a reciprocal move from Israel as the Bush administration hoped to improve the chances for peace.

A MASKED Hamas fighter sat down at Palestinian President Mahmoud Abbas’s desk yesterday and declared an end to the Western-backed authority in the Gaza Strip — in an imaginary telephone call to the United States.

The Israeli and Palestinian leaders today called off a planned summit this week, dealing a new setback to efforts to halt nearly a month of fighting between the Israeli army and militants in the Gaza Strip and restart peacemaking.

US Secretary of State Condoleezza Rice today found her plans to lead a symbolic Middle East peace summit eclipsed amid uncertainty and disagreement over how to handle a power-sharing deal to end internal Palestinian fighting.

Rival Palestinian delegations met in the dark hours of the morning as they prepared for crucial talks in the Saudi holy city Macca today on ending their bloody street battles and resuming the peace process with Israel.

Palestinian president Mahmoud Abbas has called for an early election to end his violent clash with Hamas, in a gamble that banks on the support of Palestinians as he seeks to weaken the Islamic militants, avoid civil war and continue peace overtures with Israel.

In a statement faxed to reporters today, Hamas openly accused a Fatah “death squad” for the killing of Hamas judge Bassam al-Fara.

Palestinian president Mahmoud Abbas travelled to Gaza today for negotiations with Hamas to put what he hoped will be the finishing touches on a national unity government made up of independent experts.

Palestinian President Mahmoud Abbas said he will dissolve the Hamas-led government within two weeks if the Islamic militant group does not agree to form a governing coalition with his Fatah Party.

President Mahmoud Abbas’ efforts to set up a Palestinian government acceptable to the West suffered a new setback when the prime minister from the Islamic militant Hamas group said he would not lead a coalition that recognised Israel.

President Mahmoud Abbas’ bumpy efforts to set up a Palestinian government acceptable to the West suffered a new setback today, after the prime minister from the Islamic militant group Hamas said he would not lead a coalition that recognises Israel.

Hamas officials today gave Palestinian President Mahmoud Abbas the go-ahead for negotiations with Israel, a major shift in the militant Islamic group’s position toward the Jewish state as it worked to end its international isolation.

ISRAEL will try diplomacy with the Palestinians until the end of the year before resorting to a plan to set a border unilaterally in the occupied West Bank, a senior cabinet minister said yesterday.

Hamas says it has completed the formation of its government without bring in moderate parties, a step that looked likely to only increase the chances of international isolation.

Palestinian President Mahmoud Abbas yesterday toured the devastated Jericho prison where Israel spirited away six prisoners, denouncing the raid as an ”unforgivable crime".

Hamas’ prime minister-in-waiting kept the Middle East in suspense by refusing to give an assurance that he would honour interim peace deals with Israel.

Hamas’ political chief today reiterated that the militant Palestinian group would not recognise Israel, and issued a strong warning to current Palestinian leader Mahmoud Abbas to take no steps without consulting the militant group.

Militant Islamic group Hamas risked world isolation today after the movement’s shock victory in Palestinian parliamentary elections.

Israel will insist that Palestinian leader Mahmoud Abbas keep his commitments to disarm militants, the Israeli defence minister said tonight.

The ruling Fatah Party and the Islamic Hamas group today made impassioned last-minute appeals for support on the final day of campaigning in the Palestinian parliamentary elections.

IN his first policy statement since becoming Israel’s acting prime minister, Ehud Olmert said that he wants to resume final peace talks with the Palestinians and take harsh action against Israeli squatters in the West Bank - a sign the front-runner in Israel’s March 28 election is ready for bold steps to end the conflict.

Acting Israeli Prime Minister Ehud Olmert said in his first policy statement today that he hopes to start working on a final peace deal with Palestinians after Israel’s March 28 elections, and hinted that Palestinians in Jerusalem might not always be under Israeli rule.

Mahmoud Abbas is under growing pressure from his Fatah Party to postpone the January 25 parliament election amid fears about a possible Hamas victory, an aide to the Palestinian leader said today.

A PALESTINIAN suicide bomber blew himself up yesterday among shoppers waiting to enter a shopping mall in the central Israeli town of Netanya, killing at least five bystanders and wounding more than 30.

Hamas said today that the Islamic militant group would not renew an informal nine-month-old truce, which expires at the end of the year, after Israel killed one of its leading activists in an airstrike in Gaza.

Hamas, the largest Palestinian militant group said today it would not go back to all-out war against Israel, even after Israeli missiles killed one of its top gunmen.

Israeli missiles hit a car in the Gaza Strip, killing two top militants, drawing threats of reprisals and further compromising Palestinian leader Mahmoud Abbas ’ efforts to restore calm and take control of the volatile seaside territory.

Israeli Prime Minister Ariel Sharon said today he would not meet with Palestinian leader Mahmoud Abbas unless the Palestinian Authority takes steps to stop militants from attacking Israelis.

US president George Bush has said that he was instructed by God to invade Iraq and Afghanistan, according to a new BBC series.

Palestinian leader Mahmoud Abbas told his people in a televised speech today that he would take immediate steps to impose order in chaotic Gaza.

Palestinian leader Mahmoud Abbas headed to Washington today with a long list of demands for the US president, though privately Palestinian officials said they don’t expect much from George Bush and some even questioned the wisdom of making the trip at all.

ISRAEL put in question peacemaking moves yesterday after Palestinian President Mahmoud Abbas said he would free a militant jailed over the killing of an Israeli minister.

Israeli and Palestinian leaders are gathering at a Middle East summit today to make an expected ceasefire announcement aimed at ending four years of violence and beginning a new era of peace talks.

ISRAEL warned yesterday it has intelligence suggesting militants will try to disrupt its summit with Palestinians at an Egyptian Red Sea resort today.

The Israeli and Palestinian leaders will declare a formal end to more than four years of fighting at tomorrow’s Red Sea summit, both sides said tonight.

Israeli Prime Minister Ariel Sharon has said he is very satisfied with efforts by Palestinian leader Mahmoud Abbas to halt violence, and that he is interested in renewing long-stalled peace negotiations.

Islamic militant group Hamas joined in the mood of optimism in Gaza today and signalled it would suspend rocket attacks on Israel.