The latest plan to establish a truce between Israel and the Palestinians was reminiscent of security co-operation arrangements drawn up in the 1990s.

Under the so-called "Gaza first" initiative - the brainchild of Defence Minister Binyamin Ben-Eliezer - Israeli forces would withdraw from Palestinian territory in Gaza to positions held before the start of the Intifada in September 2000.

Israel would also ease restrictions on travel and work permits - which have crippled the Palestinian economy - and allow the Palestinian Authority (PA) to assume control of security.

The process would take place in three stages, beginning with a truce agreement between Israel, and the PA, Hamas and Islamic Jihad militant groups to halt attacks on Israeli targets.

As a condition, it was reported that Israel expected the Palestinians to seize weapons and place some militant leaders under house arrest.

'Second phase' wrangling

But talks foundered amid wrangling over the timing and schedule of the second phase of the scheme, which would have seen a similar withdrawal of troops from occupied towns in the West Bank.

We are starting from positions so far apart that it's hardly to be expected we will reach agreement in a first meeting

Israeli Transport Minister Ephraim Sneh

Palestinian Cabinet Secretary Ahmed Abed al Rahman told the BBC that Israeli demands for militants to surrender weapons and be placed under house arrest before any withdrawal were unrealistic, and could provoke a civil war.

And Palestinian Planning Minister Nabil Shaath said it was "not really a plan - they didn't really respond to the clarifications we asked for".

The Israelis "are not going to pull out of Gaza, or the lateral roads their tanks now occupy," he told the BBC.

Despite the talks ending in stalemate, on Wednesday an unnamed security official speaking to the Israeli Ha'aretz newspaper had sounded a note of pragmatism:

"There's no point expecting the PA to undertake an all-out 'War On Terror' ... that won't happen immediately. There has to be a realistic plan and no grandiose expectations."

The official told the paper he believed that the plan could have succeeded, as Palestinian security forces remain largely intact in Gaza, and the PA could have exerted influence to control militants there.

Distrust

However correspondents say scepticism and mutual distrust greatly undermined the plan.

The scheme would have restored a degree of normality

Palestinians, they say, doubted the sincerity of the Israeli proposal, while many Israelis believe that the PA lacks the authority to crack down on militant activity.

Despite the plan's apparent failure, Israeli Transport Minister Ephraim Sneh, who often comments on security issues, expressed cautious optimism.

"We are starting from positions so far apart that it's hardly to be expected we will reach agreement in a first meeting," he told the Reuters News Agency.

More talks have been scheduled for next week.

At least 1,489 Palestinians and 585 Israelis have been killed since Palestinians began an uprising against Israeli occupation in September 2000 after talks on a Palestinian state in the West Bank and Gaza collapsed.