Israeli Prime Minister Ehud Olmert says Israel will move forward with a plan to redraw its borders unilaterally, if the Hamas-led Palestinian government does not alter its policies.

Speaking before a joint meeting of Congress Wednesday, Mr. Olmert said Israel is willing to negotiate with the Hamas-led government of the Palestinian Authority, if it renounces terrorism and recognizes Israel's right to exist.

But if Hamas refuses, he said Israel will not "give a terrorist regime a veto over progress."

Earlier, a top Israeli official said the Palestinian government has until the end of the year to change policies before Israel moves forward with plans to withdraw from parts of the occupied West Bank and set new borders.

During his address Mr. Olmert also praised ties with the United States, saying the two countries are united in a struggle against terrorism.

During meetings with President Bush on Tuesday, Mr. Olmert disclosed details of the withdrawal plan. It includes dismantling some small Israeli settlements in the West Bank, annexing major ones and redrawing the border.

Mr. Bush called the plan a "bold idea."

Also Tuesday, the U.S. House of Representatives voted to cut off all aid to the Palestinians' Hamas-led government, and to declare the Palestinian Authority a terrorist sanctuary. The White House opposes the move, saying it would constrict the flow of humanitarian aid.

In Israel, the country's military chief, Lieutenant-General Dan Halutz, told lawmakers that he does not believe economic pressure will hasten the collapse of the Hamas-led government.

The United States and other Western nations suspended aid to the Palestinian Authority after Hamas came to power, because the group refuses to condemn violence and accept Israel's right to exist as a nation.

Some information for this report was provided by AP.