Israeli army surrounds village

Israeli troops and tanks took positions near the West Bank village of Beit Jalla today in an invasion-style operation, after a heavy exchange of fire between gunmen in the village and soldiers protecting a nearby Jewish neighbourhood.

The movement came just a day after Israeli tanks and bulldozers rumbled into the West Bank town of Jenin and destroyed a police building - the first incursion into a Palestinian town since Israel relinquished civilian control over Palestinian population centres in 1995, under interim peace accords.

The deployment near Beit Jalla, Bethlehem and Beit Sahour, all near Jerusalem, was within Israeli-controlled territory, the military spokesman said. Palestinian witnesses said soldiers fired flares over Beit Jalla, convincing villagers than an invasion was imminent.

Israeli prime minister Ariel Sharon warned that if violence continued - a reference to suicide bombings and gunfire attacks - "The Palestinians will lose additional assets, and they have something to lose".

Palestinians accused Israel of escalating a bloody conflict that has dragged on for more than 10 months. The United States criticised the Israeli move into Jenin, calling it provocative.

The Israeli moves toward Palestinian-controlled territory and the wave of suicide bombings further eroded the foundation of interim peace accords begun in 1993 with a goal of a full peace treaty.

But peace talks broke down in January with key issues far from resolution, and violence erupted in September.

After hours of heavy gunfire yesterday morning aimed at Gilo, a Jewish neighbourhood in a disputed part of Jerusalem claimed by both sides, Jerusalem Mayor Ehud Olmert called for an invasion of Beit Jalla to put an end to constant exchanges.

Speaking to police commanders in Jerusalem, Sharon said: "Every people has the right to self-defence," adding: "The firing on Gilo will be stopped."

His troops began moving shortly afterwards, but stopped short of another invasion.

The Palestinian-Israeli has conflict intensified over the past week, with two Palestinian suicide bombings in main Israeli cities, Jerusalem and Haifa, followed by Israel’s takeover of Orient House, the Palestinian political headquarters in Jerusalem, and the incursion into Jenin.

Palestinian militants remained defiant. "If Sharon is going to escalate by invading cities, I believe that the Palestinians will escalate their resistance," said Abdel Aziz Rantisi, a leader of Hamas, the Islamic movement that has carried out the deadliest bomb attacks in Israel.

Palestinians appealed to the United Nations Security Council, hoping for a resolution that would create an international observer force. Israel has harshly opposed posting observers, fearing that they would blame Israel for every incident of violence, and the United States has twice blocked Arab moves in the Security Council.

Israel justified its military moves by claiming Palestinian leader Yasser Arafat’s police had not moved against the militants. "The Palestinian security forces have not been doing anything," said Israeli Government spokesman Avi Pazner.

"How can you interpret this, except as a green light for terror?"