Although today's planned declaration by Ariel Sharon and Mahmoud Abbas was still being negotiated last night, the deal will be an advance for the new Palestinian president.
Mohammed Dahlan, the former minister who has been closely involved in security talks with Israeli officials, backed up an earlier prediction by the cabinet minister Saeb Erekat. "We have agreed to announce a neutral ceasefire,'' he said.
A senior Israeli official confirmed that Mr Abbas would announce a "cessation" of armed action against Israel while Israel would itself declare that it would "cease all pro-active military activity".
However, Mr Sharon is expected to make clear that continuation of the ceasefire will depend on a series of steps that the Palestinians will have to undertake to prevent factions from being able to resume hostilities.
After meeting Condoleezza Rice, the US Secretary of State, yesterday, Mr Abbas said he was hoping for a reciprocal announcement from Israel in response to the period of "quiet" he had negotiated with the armed factions. But Israel had hitherto been reluctant to make a formal ceasefire declaration of the sort sought by Mr Abbas.
Instead it has taken a series of steps designed to maintain the so far undeclared truce. Israel has largely handed over control of Gaza - scene of the worst conflict during the past year - to Palestinian security forces and has agreed not to pursue wanted militants other than in cases where it suspects they are planning an attack on Israel.
News of the imminent ceasefire announcement last night came as Ms Rice announced that President George Bush was sending a US general as a "security co-ordinator", marking the US's most serious engagement in the Middle East peace process for three years.
Ms Rice again went out of her way to demonstrate US support for Mr Abbas after the meeting yesterday on the eve of today's summit with Ariel Sharon in Egypt, the first top level meeting between Palestinian and Israeli leaders since the uprising began four-and-a-half years ago.
General William Ward, a decorated former commander of the NATO stabilisation force in post-war Bosnia, will report directly to Ms Rice and will have an important role in reforming, reorganising and training Palestinian security forces, as well seeking to ensure coordination between Israel and the Palestinians to prevent the ceasefire from breaking down, as an earlier one did in 2003 after less than three months.
Raanan Gissin, the spokesman for Ariel Sharon, said yesterday: "This is someone who will be like a referee, if there is a need ... to mediate and prevent a crisis. The American involvement will increase as progress is made."
Ms Rice emphasised US support for the "historic decision" to withdraw the settlements from Gaza later this year.
But she also confirmed that she had told Israel that it, as well as the Palestinians, must live up to its obligations under the road map, including those to dismantle dozens of illegal settlement outposts in the West Bank and to halt settlement expansion, which it has not fulfilled.
Ms Rice said that the Palestinians should be "very proud" of their recent presidential elections. She underlined the contrast with the US's virtual boycott of relations with Yasser Arafat during the past four years by praising Mr Abbas for standing on a platform of ending the armed intifada and of political reform and for the steps he had taken since then to secure a halt to armed conflict.