Israeli Prime Minister Ariel Sharon says his government has decided to establish buffer zones to protect Israelis from attacks by Palestinian militants.
In a nationwide address, Prime Minister Sharon said Israel will establish security zones to separate Israelis and Palestinians.
Mr. Sharon says obstacles will be placed along such areas, but he did not elaborate on where such zones will be setup or the impact they will have on people living on both sides of them.
The prime minister says Israel will continue efforts to achieve a cease-fire with the Palestinians after nearly 17 months of conflict, and will take measures to prevent an escalation of the fighting into a "total war."
"Of course we will make every effort to reach peace," said Mr. Sharon. "We would like to have peace. We are not going to negotiate under terror. One can not negotiate peace under terror."
In his speech, the Israeli prime minister said any peace agreement will have to include a complete demilitarization of the Palestinian territories.
Earlier, Palestinian leader Yasser Arafat renewed his call for a cease-fire.
The declarations came, however, after a major upsurge in violence in recent days.
At least 25 Palestinians have been killed in massive Israeli military strikes, following the killing of six Israeli soldiers in an ambush earlier this week.
Palestinian negotiator Saeb Erekat sees little hope offered by Mr. Sharon's address and stressed outside intervention is needed to stop the bloodshed. "There is an all-out war being waged against us by Sharon and I am afraid to say that things will go from bad to worse unless we see an American and European intervention," he said. "I know we should not think that people will come to rescue us, but at the same time what good will it do for the Americans and Europeans to watch both Israelis and Palestinians sink in their blood."
Meanwhile, Palestinian security forces announced they have arrested three suspects in connection with the assassination of an Israeli cabinet minister.
The men are wanted for the killing of Israeli Tourism Minister Rehavam Zeevi in a Jerusalem hotel last October.
Mr. Sharon says Palestinian leader Yasser Arafat will continue to be confined to his headquarters in the West Bank city of Ramallah until those who assassinated the cabinet minister are arrested and extradited.
Israeli military forces have kept the Palestinian leader under virtual house arrest since early December.