Israel to ease West Bank occupation
He added the government had released millions of dollars in frozen tax money in a further concession.
The gesture came as Israeli officials defended the bombing and dismissed reports that a ceasefire declaration had been signed by militant groups before the attack. However, officials also acknowledged military intelligence that led to Israel's raid was flawed.
The army said it would investigate. Foreign Ministry spokesman Daniel Taub said: "It's quite clear that those (assessments) are not as accurate or as fail-safe as we would like and clearly there are going to be lessons that have to be learned from this operation."
Nine of the dead from the pre-dawn raid on Gaza City were children, including one two-month-old baby who was borne aloft by angry mourners Tuesday in a funeral procession that brought out tens of thousands of Palestinians to the dusty streets of Gaza.
Palestinians yesterday pulled the bodies of three children from the rubble. They said the names of the children were on the list of dead from Tuesday, and relatives thought their bodies could not be recovered.
Hamas vowed revenge for the killing of Salah Shehadeh, the leader of the militant group's military wing who Israel says was behind dozens of attacks in the past 22 months of fighting.
Prime Minister Ariel Sharon called the killing "one of our biggest successes". Israeli civilian and military leaders, however, said the loss of civilian life was a grave error.
Israeli media largely reflected those views. "The assassination and the embarrassment," read the headline in the Maariv daily yesterday. Haaretz said the army would investigate what it called the "Gaza bombing disaster".
Yediot Ahronoth quoted Sharon as saying if he had known civilians were with Shehadeh, he would have postponed the assassination.
Israeli Defence Minister Binyamin Ben-Eliezer told Israel's Cabinet: "According to the information which we had there were no civilians near him and we express sorrow for the injuries to them."
President Moshe Katsav told Army Radio it appeared the army's intelligence was "not complete" but responsibility for the "mishap" rested with Israeli politicians.
Peres said he had called the Palestinian finance minister yesterday to tell him about $45 million was being transferred about 10% of the total amount Israel has withheld in tax revenues and that Israel had forgiven about $31m in debt.
In addition, 4,000 work permits had been issued of a promised 7,000, and the total would reach 30,000, he said.
Before fighting broke out in September 2000 an estimated 125,000 Palestinians crossed daily into Israel for jobs but Israel has since blocked most of them, fearing attacks.
