Israel is ruling out the further release of Palestinian prisoners, saying the Palestinians must do more to crack down on militants. The decision poses a dilemma for the new Palestinian leadership.

Prime Minister Ariel Sharon told his Cabinet Israel will not release more Palestinian prisoners until the Palestinian Authority cracks down on militant groups.

Under a cease-fire agreement reached three months ago, Israel released 500 prisoners and was supposed to free 400 more. But Mr. Sharon put that on hold after a wave of Palestinian rocket and mortar attacks in the Gaza Strip rattled the truce.

Israeli Foreign Minister Silvan Shalom says Israel will keep its part of the deal, when the Palestinians keep theirs.

"[The] time has come for the Palestinian leadership to take the strategic decision to dismantle the infrastructure of terrorist organizations, in order to bring peace and quiet here to our region," Mr. Shalom says.

The Palestinians accused Israel of acting in bad faith. Palestinian Cabinet Minister Ghassan Khatib said the prisoner issue could blow up the cease-fire.

"Well, ultimately if this political process is going to revive successfully, all Palestinian prisoners should be released," Mr. Khatib says.

Israel's tough position could further weaken Palestinian leader Mahmoud Abbas, whose ruling Fatah faction is facing a growing challenge from the Islamic militant group, Hamas. Hamas, which seeks the destruction of Israel, made significant gains in Palestinian municipal elections last week, and is expected to do even better in parliamentary elections this summer.

Mr. Abbas says he needs Israel to release prisoners to strengthen his grip on power and show his people the tangible benefits of peace. But Mr. Sharon told the Cabinet that he would not strengthen Mr. Abbas at the expense of Israeli lives.