Of the six cities entered by Israeli troops last month, only Jenin remains occupied.

The move comes after repeated calls from the United States and European Union countries for an Israeli pull-back.

A delegation of the EU met Egyptian President Hosni Mubarak and Palestinian leader Yasser Arafat on Saturday and is due for talks with Israeli leaders on Sunday.

The delegation, headed by current EU president Guy Verhofstadt, European Commission head Romano Prodi and foreign policy chief Javier Solana, said that a Palestinian state was an essential element of any peace deal.

It is seeking to inject new life into stalled Israeli-Palestinian peace talks.

Mr Verhofstadt said after the meeting with Mr Mubarak that there was an urgent need for stability in the region.

This is the highest-level European mission to the region since the latest conflict between Israel and the Palestinians erupted 14 months ago.

The EU delegation has no concrete proposals to put to Middle East leaders. Mr Solana said that what was needed was not a new initiative, just the political will to implement existing ones.

Low expectations

But according to the BBC's correspondent in Jerusalem, James Reynolds, few in the Middle East think the Europeans will make much progress alone.

On Monday, US Secretary of State Colin Powell is due to deliver what is being regarded as a key speech on the Middle East. Analysts believe that progress will only be made via the US, not the EU.

The EU delegation's trip comes amid a new flurry of Middle East diplomatic activity on the margins of the United Nations General Assembly in New York.

BBC Cairo correspondent Caroline Hawley says that in the wake of the 11 September terrorist attacks, everyone seems to be talking now about the need for a Palestinian state to help eliminate the sense of injustice on which terrorism feeds.