Israel has lifted its blockade around Bethlehem, but is continuing to impose a travel ban on Palestinian leader Yasser Arafat. An Israeli government spokesman says the continued ban means Mr. Arafat will not be able to attend the Orthodox Christmas services in Bethlehem on January 6, unless he arrests and hands over the suspected killers of an Israeli cabinet minister.

Israel's defense minister, Binyamin Ben-Eliezer announced he was lifting a military blockade around Bethlehem, the birthplace of Jesus Christ, in order to ease access for travellers during the festive season.

The restrictions were put in place around Bethlehem and other Palestinian-ruled cities during the past 15 months of fighting and were tightened earlier this month follow a series of Palestinian suicide bombings.

On Thursday night, a Palestinian suicide bomber was shot dead by Israeli forces near a Jewish settlement in the Gaza Strip.

It was apparently the first operation of its kind since Mr. Arafat appealed to his people two weeks ago to suspend the violence, in particular suicide bombings.

But despite his call and a noticeable drop in violence in recent days, Israel continues to insist that Mr. Arafat is not doing enough to curb Palestinian terrorism.

Israel barred Mr. Arafat from travelling to Bethlehem for Christmas festivities held this week in accordance with the Western calendar.

The move prompted international criticism of Israel.

But Raanan Gissin, a spokesman for Israeli Prime Minister Ariel Sharon, insisted that the ban will remain until Mr. Arafat arrests and hands over the Palestinians suspected of assassinating Israeli Tourism Minister Rehavam Ze'evi in October.

Mr. Gissin says that Israel will not relent even to allow Mr. Arafat to attend the Orthodox Christmas services in Bethlehem on January 6.

This will be seen as another public humiliation of Mr. Arafat by Israel, since most Christians in the Holy Land are Palestinians and the majority of them are are members of the Orthodox churches.

Until this year, Mr. Arafat, a Muslim, had attended Christmas celebrations in Bethlehem annually, ever since the town came under Palestinian control in 1995.

In a separate development Friday, the body of an Israeli man was found Friday in the West Bank. Police believe he was murdered by a Palestinian youth 10 days earlier.