Israel will also agree to release all prisoners jailed without trial, as peace talks progress, handing powers of criminal prosecution to the new local force.
Once local Arab police are on the streets, the Israeli occupation forces would withdraw from Palestinian towns in the occupied territories to 'specified security locations'. Jewish settlements will become enclaves, remaining under Israeli security control.
In a separate move yesterday, the Israeli cabinet announced the appointment of two Israeli Arabs, Nawaf Masalha and Walid Sadex, as deputy ministers, the highest- ranking Arab officials in Israel's history. The appointments are designed to shore up support from Arab parties in advance of new peace talks in Washington on 24 August.
The decisions to support a Palestinian-Jordanian police force and to release political prisoners are expected to be on the table in Washington, in a new demonstration of commitment to progress from the Prime Minister, Yitzhak Rabin. Officials are however warning against high expectations of the talks, saying that the six to nine month deadline set by Mr Rabin for autonomy now appears unrealistic.
Policing is the biggest hurdle for the Rabin government, which faces attack from the Israeli right and from settlers if it appears to be threatening Israeli security. The decision to back a local Arab police force - which Palestinians and Jordanians have been discussing in Amman in recent days - is a major shift in Israeli thinking.
The plan envisages that the police, which could number 20,000, would be drawn from Palestinians in the occupied territories. The model is taken from the Camp David accords, which talk about a local Arab police force under Jordanian officers. Palestinians support only Jordanian training for the force.
In secret discussions with Palestinian leaders, Israel itself has offered to train the force. No decision has yet been taken on whether, or how, it should be armed.
Israel has also developed outline proposals for the Washington talks in other key areas.
On the Syria question, Israel is abandoning its hope of stalling, and is preparing to offer Damascus an early deal on the Golan Heights. Details are not settled, but could involve an offer to return some of the territory conquered in 1967 - possibly under a lease-back deal and international supervision. The pay-off would have to be a peace treaty and agreement from Syria to curb Hizbollah activity in south Lebanon.
On elections to the interim authority, Israel now rules out a legislative assembly, as proposed by the Palestinians, and will instead propose election of a limited administrative council numbering between 12 and 20. No candidate from East Jerusalem will be eligible to stand in the election, although East Jerusalem Palestinians will be eligible to vote.
On the scope of the council's powers, Israel is considering offering some controls over territory as well as people, perhaps in the areas of water and land use. Until now Israel has proposed devolving powers only over areas such as education, health and transport, granting no rights over the lands. However, one Israeli source said: 'The territorial aspects cannot be ignored.'
On Jewish settlements in the occupied territories, Israel will not budge from its present position: a freeze on most settlement but no freeze in the Jordan Valley or Greater Jerusalem. That means large settlements in the Gush Ezion block remain excluded from the freeze, as does the Jerusalem suburb of Maale Adumim. The Palestinians will be told to take it or leave it.Reuse content