I would love to deny it fully and clearly: There is no initiative, [no] Israeli military activity in the Gaza Strip

Colonel Olivier Rafowicz Israeli army

Palestinian officials had alleged that tanks carried out unprovoked shelling of a police post south of Gaza city, and entered the self-rule areas at three points further north.

But Colonel Olivier Rafowicz, a spokesman for the Israeli army, categorically denied any incursions and said the only activity undertaken by the Israelis there might have been repair work on the Israeli side of the border fence.

This shelling was unprovoked and it proves that Israel's call for a ceasefire is a lie

Brigadier Abdel Razeq al-Majeida, Gaza police chief

The army maintains that it has been respecting a ceasefire in the territories since Tuesday evening, when troops were ordered not to shoot at Palestinians unless they themselves were under fire and Israeli lives were at risk.

Sharon broadcast

The change in tactics came after Israeli Prime Minister Ariel Sharon called for a truce in response to recommendations on ending eight months of violence in the Middle East made by the US-led Mitchell commission.

But Mr Sharon rejected a freeze on building in Jewish settlements, a key recommendation of the report, prompting Palestinian accusations that Israel is being selective in its acceptance of the report.

New rules will not preclude the shooting of Palestinian stone throwers

European Union foreign policy chief Javier Solana, one of the report's architects, is in Israel on Wednesday to discuss the Mitchell report with Mr Sharon.

Despite talk of peace, violence continued unabated on the ground overnight, with exchanges of gunfire on the outskirts of Jerusalem. Israel said it had been responding to Palestinian attack.

'Trick'

Correspondents in Jerusalem said the order to stop offensive action, while appearing to be a significant shift, still gave the army considerable leeway.

Mitchell Report's proposals

Disengagement of forces on both sides Resumption of security co-operation Clear statements by the Palestinian Authority calling for an end to violence Freeze on all settlement construction and enlargement

Many previous operations, including the use of F-16 fighter bombers against Palestinian areas, have been justified on self-defence grounds.

In Washington, White House spokesman Ari Fleischer told reporters that President Bush "welcomes the statement by Prime Minister Sharon", and said that the US "would welcome a similar statement" from the Palestinians.

Palestinian officials, however, were quick to describe the new Israeli military rules of engagement as a "trick".

"Talk of a ceasefire is misleading because actually there is only aggression against the Palestinian people, it's not a war that requires a ceasefire," a close aide to Palestinian leader Yasser Arafat, Ahmed Abdel-Rahman told the French news agency AFP.