Israel has fresh hope for ailing ceasefire

Shimon Peres, Israel's Foreign Minister, said last night he held renewed hopes of cementing a ceasefire after more than an hour of talks with Yasser Arafat in Cairo.

The meeting, the first between the two Nobel peace prize-winners for two weeks, was approved in advance by his Prime Minister, Ariel Sharon.

Mr Arafat left the talks without speaking to reporters, but the Israelis said the Palestinian leader had agreed to more frequent meetings between Israeli and Palestinian security chiefs, and undertaken to try to bring an end to violence.

The Israelis were also encouraged by the role played by the Egyptian President, Hosni Mubarak, as persuader and facilitator, and his veteran political adviser Osama el-Baz. The Egyptians are pressing Mr Arafat to help make the ceasefire stick as a step towards implementing the international Mitchell report into the latest unrest in the region.

Egypt, the first Arab state to sign a peace treaty with Israel, is worried by the drift towards war. Mr el-Baz warned Israel at the weekend that Egypt would not stand aside if Israel attacked. Mr Peres stressed before meeting Mr Arafat that Israel had no intention of invading the Palestinian territories or of trying to remove the leadership as some reports last week had suggested. The Foreign Minister said: "It's all nonsense. Arafat in our eyes is the elected leader of the Palestinians and he represents them."

Israeli commentators suspect, however, that rumours of an invasion, with "thousands of Palestinian and hundreds of Israeli casualties", are being spread as psychological warfare.

Earlier yesterday, the Israeli Cabinet approved a plan to build five communities on a desert site near the Gaza Strip, which were once offered to the Palestinians as part of a land-swap. Ehud Barak, the previous prime minister, suggested ceding the Halutza dunes in the Negev region in return for keeping some settlements in the West Bank. The Palestinians rejected the proposal.

Israel's left-wing opposition Meretz party criticised the scheme as a death blow to any chance of reaching a deal. Mossi Raz, a Meretz MP, said: "The government is tying its hands. Even if a peace agreements doesn't happen today, what will happen in 10 years?"

Labour ministers in the national unity government voted for the building plan. Right-wing coalition parties promoted the project as a way to block territorial compromise with the Palestinians. However, the building at the Halutza site could make it easier to evacuate the 6,650 Jewish settlers in Gaza by eventually providing an alternative for them inside Israel proper.

Israel continued its offensive yesterday against Palestinian militants it accuses of plotting attacks in Israel and the occupied territories. Undercover agents snatched Mahmoud Hamdan, a leader of the Islamic Jihad group, in Bethlehem. Mr Hamdan, 42, was described by an Israeli source as "a big fish" in the most radical of Palestinian groups.

Israeli tanks moved into the West Bank town of Hebron from three directions in the early hours of early Monday, destroying Palestinian police posts during a fierce exchange of fire, witnesses said.

The Israeli military said soldiers returned Palestinian fire in Hebron, the only West bank town divided into Israeli and Palestinian zones. Palestinian officials said nine people were wounded, none seriously.