Mitchell 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

His comments came after former US Senator George Mitchell unveiled the international commission's long-awaited report on the crisis.

It recommends a string of confidence-building measures as well as the ceasefire.

The report does not apportion blame for the upsurge of violence, but warns that the situation will only get worse unless swift action is taken.

Specifically, it calls on the Palestinian Authority to make it clear that acts of terrorism are unacceptable.

The Israelis for their part, are urged to impose a total freeze on Jewish settlements in Palestinian areas.

It is now time for both sides, with the help of the international community and the United States, to move forward

US Secretary of State Colin Powell

Mr Powell, announcing his endorsement of the report, revealed that the US was giving special responsibility for the Middle East to William Burns, currently US ambassador to Jordan.

"The commission's report provides a constructive and positive attempt to break the cycle of violence," said Mr Powell.

'Seize the moment'

"It is now time for both sides, with the help of the international community and the United States, to move forward."

Until now, the Bush administration has adopted a markedly less hands-on approach to the Middle East than the previous Clinton team, which fought hard to achieve a peace deal.

UN Secretary-General Kofi Annan, in his response to the report, urged the two sides in the conflict to "seize the moment".

Mitchell warned violence could get worse

"I hope this opportunity will not be wasted, and that they will seize it as a moment to step back from the precipice to try to end the violence in the region," he said.

Many of the report's recommendations were already widely known, with the Palestinians accepting them in full.

Mr Mitchell said that ending the violence had to be the "principal aim" of the two sides and that a resumption of security co-operation was vital.

The Palestinians, Mr Mitchell told journalists, had to make a "100% effort to prevent terrorist operations... including immediate steps to apprehend and incarcerate terrorists operating within the Palestinian Authority's jurisdiction."

Israelis mourn a victim of the spiralling violence

Israel's freeze on all settlement activity should "include the natural growth of existing settlements".

The European Union earlier joined in the diplomatic pressure for peace, with its leading security official, Javier Solana, also calling for an immediate ceasefire.

He was speaking in Cairo at the start of a four-day diplomatic initiative.

New attacks

But in the hours before the report, the conflict claimed more casualties.

Two Palestinians were killed by Israeli fire in the Gaza Strip and Israeli helicopter gunships blasted what they described as a Palestinian mortar factory.

The Israeli army said the two Palestinians were attempting to plant a roadside bomb near the border fence with Israel. Palestinian officials said the men were farmers.

Palestinians buried a farmer killed on Saturday

The air strike targeted a factory at the Jabaliya refugee camp, which the Israelis described as a factory used to produce mortar bombs.

The Palestinians, however, say the Israeli strike hit a steelworks factory, wounding four people.

BBC Jerusalem correspondent Hilary Andersson, reporting from the scene, says there is no direct evidence of mortars being made there, although the site - a scene of complete devastation - was clearly used to manufacture metal parts.

Palestian sources also reported an Israeli incursion into Palestinian-controlled territory in the Gaza Strip on Monday.

Israeli tanks raided the town of Qarara, tbe sources told the French news agency, AFP, shelling a mosque and strafing cars with heavy machine gun fire.