The Israeli daily newspaper Ha'aretz said that the move was part of a security plan presented by the Palestinians at a high level meeting on Saturday.

The Israeli army has no intention of remaining in the sectors (of the West Bank) where the Palestinians take the situation in hand and stop the terrorism

Shimon Peres

Ha'aretz reported that Palestinian Interior Minister Abdel Razek Yehiyeh presented the security plan when Israeli Foreign Minister Shimon Peres and Senior Palestinian negotiator Saeb Erekat met for the first high-level talks between the two sides in nearly two weeks.

The Palestinians demanded a full withdrawal from all seven towns and cities to the lines Israel occupied before the outbreak of the Palestinian uprising, or intifada, in September 2000.

Security demands

As part of the plan, the Palestinian security forces would undergo major changes and be streamlined into two or three organisations, the newspaper said.

"We told them that the Israeli army has no intention of remaining in the sectors (of the West Bank) where the Palestinians take the situation in hand and stop the terrorism," Mr Peres said after the meeting.

The high-profile talks were the first in two weeks

In an interview with Israel Radio, Mr Peres said that the army was prepared to withdraw from the West Bank towns of Hebron and Bethlehem as long as Palestinian security forces can prevent attacks against Israel.

"We really want to get out of there as soon as (Palestinian) security is deployed," Mr Peres told Israel Radio.

When asked if he could confirm reports that the army would withdraw from towns, he added: "Yes, there are towns that are more quiet than others; Hebron, Bethlehem and (not occupied) Jericho."

Ha'aretz also reported that Mr Peres had suggested Bethlehem and Hebron could be used as "test cases" for an Israeli withdrawal.

Israeli forces moved into seven of the eight major Palestinian cities and towns in the West Bank and imposed curfews after two suicide bomb attacks in Jerusalem more than a month ago.

Jericho is the one West Bank town that has not been occupied.

Exile challenged

Relatives of Palestinian militants have dropped a legal challenge to Israel's attempt to exile them from the West Bank after being told they will be given reasonable time to appeal against their deportations.

The 16 men withdrew their case after Israel promised them a 12-hour notice period if it were decided that they should be removed to the fenced-in Gaza Strip.

The men, some of the 21 male relatives of Palestinian militants arrested in the West Bank on Friday, had been challenging Israel's attempts to exile them on the grounds that such a move would be illegal under international law.

The Israeli Government has drawn strong international criticism over the deportation plan, which is widely seen as an illegal attempt to collectively punish Palestinians.