US President George W Bush has cautiously backed Israel's incursion into Ramallah following talks with Israeli Prime Minister Ariel Sharon in Washington.

"Israel has a right to defend herself," Mr Bush said after the meeting, while warning that the conditions to guarantee progress towards peace in the Middle East are not yet right.

Mr Bush said no-one had confidence in the reformed Palestinian Authority and that institutions were needed that would give Palestinians hope and the Israelis confidence in dealing with the emerging Palestinian government.

Israeli tanks surrounded the headquarters of Palestinian leader Yasser Arafat in Ramallah for the second time in less than a week, just hours before the summit got under way.

Lightning raid

The Israeli army launched what it described as a "pinpoint incursion" into Ramallah before dawn, arresting at least 27 Palestinians, including policemen.

A spokesman for Mr Bush, Ari Fleischer, said Washington was monitoring the situation but accepted Israeli assurances that the incursion was "of limited duration" and was "aimed at specific terrorist targets".

The talks in Washington come as the US administration plans its next peace moves aimed at halting more than 20 months of Israeli-Palestinian violence.

Some believe Israel is seeking to oust Mr Arafat

It is Mr Sharon's sixth meeting with President Bush since the Israeli leader came to office in March last year.

Mr Bush has not yet met Mr Arafat.

Mr Bush said he and Mr Sharon had discussed the "reforms necessary that would enable a Palestinian Authority to emerge" allowing both sides to work towards ending the violence.

Testing the waters

But he added that Mr Arafat's administration still had to take much stronger steps towards reform before a Middle East peace summit, mooted for the summer, could occur.

"The conditions aren't even there yet (for a summit). That's because no-one has confidence in the emerging Palestinian government," Mr Bush said.

Speaking in the Oval Office, Mr Sharon repeated his demand that there must be an end to Palestinian violence before peace talks can resume.

The BBC's Washington correspondent, Jon Leyne, said it is widely thought that Mr Sharon is using his visit to test how the US would respond to the expulsion of Mr Arafat.

"We must have a partner for negotiations. At the present time we don't see yet a partner... with whom we'll be able to move forward," Mr Sharon said after his meeting with Mr Bush.

Initial reforms

The raid in Ramallah led Mr Arafat to postpone the first meeting of his new slimmed-down cabinet, which was to have been held later on Monday.

"There won't be a cabinet meeting tonight because of the Israeli reoccupation of Ramallah," said Palestinian West Bank security chief Jibril Rajoub.

On Sunday, following strong pressure at home and abroad to reform, Mr Arafat cut the number of ministerial posts by about a third, and appointed a general to overhaul the various Palestinian security forces.

The BBC's Caroline Hawley, in Gaza, says the new government has been greeted with a mixture of indifference and deep disappointment among Palestinians.

An Israeli Government official dismissed it as a game to impress the Americans.