JERUSALEM - Israel and the Palestinians plan to set up a panel to take some Palestinian fugitives off Israel´s hit list, a senior Israeli Defense Ministry official said Wednesday, signaling progress toward easing a major source of contention between the two sides.

Israel has vigorously pursued fugitives during four years of fighting, killing or arresting hundreds, and is chasing several hundred more, the Palestinian Authority estimates. Fugitives are one of the most sensitive issues in truce talks between Israel and the Palestinian Authority.

Amos Gilad, the Defense Ministry official, told Israel´s Army Radio that the two sides plan to set up a joint committee to decide which Palestinian fugitives will no longer be hunted by Israeli security forces. Cabinet ministers are set to approve formation of the panel later this week, Gilad said.

Israel won´t go after Palestinian fugitives who hand in their weapons and sign a written agreement pledging not to carry out attacks against Israeli targets, Gilad said. Any fugitive who violates the pledge will again become a target, he added.

The committee is to include members of the Israeli military and security service, and Palestinian officials.

The Palestinians seek blanket amnesty for all fugitives. Palestinian leader Mahmoud Abbas has said repeatedly he would not confront the militants, preferring to co-opt them. One idea for dealing with the fugitives is to fold them into Palestinian security forces.

Gilad brushed off criticism that ending the hunt for fugitives would be tantamount to pardoning Palestinians responsible for killing Israelis.

"We have to include all the fugitives who stop being active. ... We are not talking about pardoning," Gilad said. "If they return to terror and if the attacks and the murders continue, then in the end we will return to a different type of vigorous activity," he said.

Referring to the relative quiet that has prevailed in the area in recent weeks, Gilad added, "There is an opportunity here that must be exploited. All quiet is built on understandings."

In other efforts to build on political gains achieved in recent weeks, Egyptian intelligence chief Omar Suleiman met with Prime Minister Ariel Sharon on Wednesday.

Sharon spokesman Raanan Gissin wouldn´t disclose details of Suleiman´s agenda. But the Egyptian intelligence chief is a key mediator between Israel and the Palestinians, and has worked to assist with security arrangements ahead of Israel´s planned withdrawal from the Gaza Strip, set to begin this summer.

U.S. Secretary of State Condoleezza Rice is due in the region next week to try to prod the two sides ahead on the internationally approved "road map" peace plan. Palestinian Foreign Minister Nabil Shaath said Rice told him a telephone call Tuesday that she is encouraged by progress in the region.

"She thinks that there is an opportunity that should be seized, and she will work with both of us in order that this opportunity will be seized," Sha´ath said.

Jewish settlements, Israel´s separation barrier and the final status of Jerusalem will be on the table during the Palestinians´ Feb. 7 meeting with her, he said. So, too, will be Israel´s planned handover of West Bank towns to the Palestinians, a cease-fire between the two sides, the release of Palestinian prisoners held by Israel and Palestinian fugitives.

As Israel moves toward dismantling some settlements, Jewish settlers are continuing to build in four illegal West Bank outposts slated for evacuation, said Lt. Talia Somech, a spokeswoman for Israel´s military administration in the West Bank., confirming a report in the Haaretz daily. Dismantling of the outposts has been delayed as the military awaits orders from the government, the newspaper said.

Under terms of the road map, Israel must remove dozens of unauthorized outposts that began springing up in 1993 to protest the Israeli-Palestinian peace treaty signed that year. So far only a few have been removed in operations that have often touched off clashes between settlers and security forces. (Copyright 2005 Associated Press. 02/02/05)