Israel has ordered a halt to offensive military operations against the Palestinians. Palestinian President Yasser Arafat earlier announced a cease-fire and support for a global coalition against terrorism.
Israeli Defense Minister Binyamin Ben-Eliezer ordered the Israeli army not to initiate any military operations against the Palestinians.
The defense minister's order followed an announcement by Palestinian leader Yasser Arafat that he has ordered his security forces to observe a cease-fire.
Defense ministry spokesman Yarden Vatikay says Israel wants to give such a declaration an opportunity to work, but expressed skepticism that there will be an end to the violence.
Mr. Vatikay says Israeli soldiers have been ordered to be "as restrained as possible."
Earlier, Mr. Arafat told diplomats and reporters in Gaza he is ready to be "part of an international alliance to put an end to terrorism against innocent and unarmed civilians."
In an unusually conciliatory speech, Mr. Arafat says he remains committed to negotiating a peace agreement with Israel and he recognizes Israel's right to live inside secure borders.
Israel and the Palestinians have been under pressure from the United States and other countries to agree to a cease-fire.
President Bush is putting together a worldwide coalition to fight terrorism after last week's devastating attacks on New York and Washington.
Continuing fighting in the Israeli-Palestinian conflict could make such coalition-building more difficult.
Israeli Prime Minister Ariel Sharon says if there are two days of complete calm, he will allow truce talks between Foreign Minister Shimon Peres and Mr. Arafat.
Mr. Peres says if the tentative truce holds, such a meeting could be held within days.
The United Nations envoy to the Middle East, Terje Larsen, says such a meeting is critical to begin the process of ending the violence.
"It is important to start the political process because I do not believe at all that any cease-fire can hold without political underpinnings," he says." In practical terms, after a security coordination meeting, immediately there should be a meeting as planned between Foreign Minister Peres and President Arafat in order to discuss the broader issues in order to make the cease-fire hold. "
Earlier in the day, the violence continued when two Palestinians were killed by Israeli soldiers in the West Bank.
Near Nablus, one Palestinian man was killed and another wounded when, according to Israeli officials, they tried to run down soldiers with a tractor. In Hebron the body of a Palestinian taxi driver was found after a firefight between gunmen and Israeli soldiers.
Israeli tanks and bulldozers made two incursions in Gaza, destroying a building and a house.