Sharon considers alternative peace plan
The plan was leaked at a time when Mr Sharon faces growing criticism at home. Several former security chiefs have said he is stalling on renewing peace talks because he wants to avoid making concessions and his support is slipping.
Mr Sharon said he would present his new plan soon. "I just wanted the Israeli public to know that its prime minister has not stopped thinking about how to get out of the impasse with the Palestinians," he said.
The plan would kick in if efforts to resume implementation of the "road map" peace plan failed. In that case, Israel would draw its own border along the West Bank security barrier currently under construction to keep out Palestinian militants and uproot a few small settlements.
Some of the settlers would be moved to the Negev Desert and others to larger settlement blocs in the West Bank. Israel would also withdraw from Palestinian towns and release some Palestinian prisoners.
Palestinian officials were sceptical. "I hope that these declarations are not intended for public relations as Sharon suffers an internal crisis," chief Palestinian negotiator Saeb Erekat said.
Mr Sharon's ideas were floated at a time of renewed attempts to break the deadlock over the road map, which sees Palestinian statehood by 2005.
Palestinian Prime Minister Ahmed Qureia and Mr Sharon are to meet soon, though no date has been set, and Palestinian militant groups are to hold talks in Cairo next week on halting attacks on Israelis. Expectations are high that the militants, who have killed hundreds of Israelis in the past three years, will agree to stop violence.
Mr Qureia wants to take an internal truce agreement to a summit with Mr Sharon and win Israel's promise to reciprocate by halting military operations.
Palestinian negotiators have prepared a document that lists Israeli and Palestinian obligations under the road map and would be approved by the two leaders in a summit. Mr Qureia has said there is no point to hold a summit if there are no results.
Meanwhile, the Israeli cabinet decided to release 10 Jordanian prisoners in a gesture marking the end of the Muslim fasting month of Ramadan.
None of the 10 prisoners to be released were convicted of killing Israelis, a government official said.
The release will mark the Muslim holiday of Eid al-Fitr, which comes after Ramadan ends in the next few days.