The news - announced by Prime Minister Binyamin Netanyahu - comes in advance of a summit next week in Washington intended to hammer out a new agreement between Israel and the Palestinians over further Israeli withdrawal from the region.

Lyse Doucet reports on the man she describes as a "champion of Jewish settlement"

In a statement, Mr Sharon said he believed his appointment could help Israel move towards peace while protecting its security interests.

But the chief Palestinian negotiator, Saeb Erekat, described it as dangerous, saying Mr Netanyahu had opted to appease Jewish settlers at the expense of peace.

On Tuesday, the Israeli cabinet is to meet and is expected to confirm his appointment.

Mr Sharon has consistently opposed any further concessions to the Palestinians, but correspondents say his appointment is seen as a move by Mr Netanyahu to shore up support among hardliners for any agreement that may be reached over territory in the West Bank.

Mr Sharon, an ex-army general, will continue to serve as National Infrastructure Minister in Mr Netanyahu's "kitchen cabinet", the body in charge of key negotiations with the Palestinians for an interim period.

West Bank stabbing

The BBC's Jeremy Bowen: "Violent street clashes continue"

Meanwhile, reports from Israel say a Palestinian has stabbed to death an Israeli woman soldier in the West Bank.

Tension was high after a week-long Israeli imposed curfew

According to the reports, the attack took place near the Jewish settlement of Tomer in the Jordan valley, north of the Palestinian-run town of Jericho.

Israeli radio reported that the unarmed woman was waiting at a bus stop when she was stabbed repeatedly by a Palestinian man wielding a knife.

Her assailant was shot in the legs and captured by another soldier as he tried to flee.

Israel radio said the 34-year-old attacker was being interrogated.

The Palestinian Authority condemned the murder.

The attack happened a day after a Palestinian protest at an Israeli-imposed curfew in the divided West Bank city of Hebron ended in violence.