Sharon agrees to pull troops back from Gaza and West Bank

The Israeli and Palestinian Prime Ministers, Ariel Sharon and Mahmoud Abbas, emerged from a three-hour meeting last night to reveal that Israel had agreed to begin pulling its troops back from the northern Gaza Strip and the main West Bank cities.

The pull-out would take place as soon as the Palestinians were ready to take responsibility for security, the leaders said.

An Israeli statement described the talks, their second in two weeks in Mr Sharon's Jerusalem office, as "positive and very good". Israel also announced a series of confidence-building measures. They included the release of 100 security prisoners held without trial; easing of travel restrictions in the Palestinian territories; permitting 25,000 day labourers to return to jobs in Israel; and transferring an extra 150 million shekels (about £20m) a month in tax revenues to the Palestinian Authority. Israel also agreed to examine a list of other prisoners the Palestinians would like freed.

Mr Abbas had predicted earlier that the radical Islamic Hamas movement might agree to a ceasefire next week. But, according to the Israelis, the Palestinian leader said last night that his aim was not just a ceasefire, but the uprooting of terror and confiscation of illegally held weapons.

Gideon Meir, a senior foreign ministry official, said: "Israel is taking unilateral measures to show the Palestinian people that we may be entering a new era. We are putting the Palestinians to the test." He added that Mr Sharon had been firm in demanding 100 per cent effort from the Palestinians on security. He said the Israelis were impressed by Mr Abbas' sincerity about fighting terror. Mr Abbas and his security chief, Mohammed Dahlan, said last night that they had the necessary forces to act immediately in northern Gaza, but would need longer in the West Bank, where Israel has destroyed much of their security infrastructure.