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Israel responded defiantly on Thursday to sharp criticism by U.S. President Bush of a barrier it is building through Palestinian areas in the West Bank.

Israeli Vice Premier Ehud Olmert said the barrier would remain an option even if a Middle East peace process resumed.

Against a backdrop of London landmarks, President George W. Bush delivers a speech at The Banqueting House in London November 19, 2003. Bush toughened his stance on Israel over the huge barrier it is building in the West Bank as Palestinians met to discuss a truce that could help revive peace talks.  [Reuters]

"Israel will always have the right to take unilateral steps for separation from the Palestinians through a fence or other means," Olmert told Israel Radio.

In a speech in London on Wednesday, Bush toughened his stance over the barrier, saying Israel must not prejudice final peace negotiations "with the placement of walls and fences."

Israel says the barrier of concrete walls, ditches, trenches, roads, razor wire and electric fences is aimed at stopping suicide bombers from reaching its cities. Palestinians accuse Israel of trying to secure land it occupied in 1967.

Israel's biggest newspaper reported Egypt has proposed an eight-step plan for an Israeli-Palestinian cease-fire that would begin no later than December 15 and lead to peace talks.

The Yedioth Ahronot daily said it obtained the plan after Egyptian intelligence officials presented it earlier this week to Israel and the Palestinians. There was no immediate comment from the two sides.

Under the reported plan, Israeli-Palestinian talks to implement a U.S.-backed peace "road map" stalled by violence would be renewed immediately after the cease-fire began.

Israel would pledge to stop "assasinations" of militants, pull troops out of West Bank cities and halt all military operations against Palestinians, the newspaper said. The Palestinian Authority would agree to prevent "terror attacks." The report said the United States and the three other sponsors of the road map -- Russia, the European Union and the United Nations -- would guarantee implementation of the cease-fire to end three years of violence.

Egypt is trying to broker truce talks between militants and the Palestinian Authority.

CAIRO TALKS

Islamic Jihad leader Abdullah Shami arrives for a meeting with Palestinian Prime Minister Ahmed Qureia and representatives of the other militant groups, Nov. 19 2003, in Gaza City to discuss ways to reach a cease-fire with Israel.  [AP]

After meeting Prime Minister Ahmed Qurie and Egyptian mediators in Gaza on Wednesday, the main Palestinian militant factions said they had agreed in principle to talks in Cairo early next month on a truce with Israel.

Hamas and Islamic Jihad, both committed to Israel's destruction, said Egypt had proposed talks on December 2. Palestinian President Yasser Arafat's Fatah faction would also attend. The mediators meet faction leaders again on Thursday.

Qurie hopes for a cease-fire that would bind the Israelis too, unlike a one-sided truce that collapsed in the summer.

Prompted by the new push for a truce and a recent drop-off in militant attacks, Israeli officials have said Prime Minister Ariel Sharon would meet Qurie next week, though no date is set.

Israel rules out any formal truce with Islamic militants but has said it will suspend a campaign to capture or kill their leaders if attacks against Israelis cease.

Violence flared on Wednesday at the usually tranquil border with Jordan, where a gunman shot five tourists on the Israeli side before being killed. An Ecuadorian tourist was killed.

Further diplomatic pressure on Israel came from the U.N. Security Council, which voted unanimously on Wednesday for a Russian-drafted resolution backing the road map. Israel had opposed the draft, wanting no U.N. role in peacemaking since it sees the world body as pro-Palestinian.

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