Palestinians have launched a legal battle to stop the work at what was the city's main Muslim cemetery. The work is to prepare for the construction of a museum which seeks the promotion of "unity and respect among Jews and between people of all faiths".

Israeli archaeologists and developers have continued excavating the remains of people buried at the site - which was a cemetery for at least 1,000 years - despite a temporary ban on work granted by the Islamic Court, a division of Israel's justice system. Police have been taking legal advice on whether the order is legally binding. The Israeli High Court is to hear a separate case brought by the Al Aqsa Association of the Islamic Movement in Israel next week.

The project, which a spokesman said had been conceived in partnership with the Jerusalem municipality and the Israeli government, was launched at a ceremony in 2004 by a cast of dignitaries ranging from Ehud Olmert, who is currently the acting Prime Minister, to the governor of California, Arnold Schwarzenegger.

The Israeli branch of the Simon Wiesenthal Centre declined to comment yesterday and has had no role in the project.

Durragham Saif, the lawyer who brought the Islamic Court petition on behalf of three Palestinian families, Al Dijani, Nusseibeh and Bader Elzain, all of whom have members buried at the cemetery, said: "It's unbelievable, it's immoral. You cannot build a museum of tolerance on the graves of other people. Imagine this kind of thing in the [United] States or England. And this is the Middle East where events are sensitive. If this goes ahead in this way it is going to cause the opposite thing to tolerance."

Mr Saif said he had written to the Israeli State Attorney, Menachem Mazuz, seeking police enforcement of the original order. He said on a visit to the site he had entered three out of five tents where excavations were being carried out. "I was shocked to see open graves and tens of whole skeletons there," he said.

Ikrema Sabri, the Mufti of Jerusalem, demanded a halt to the excavations and said the Muslim religious authorities had not been consulted on the dig. Saying that the cemetery was in use for 15 centuries and that friends of the Prophet Mohamed were buried there, the Mufti declared: "There should be a complete cessation of work on the cemetery because it is sacred for Muslims."

Under Israel's "absentee property" law the cemetery was taken over by the Custodian of Absentee Property after the 1948 war. Mr Saif said the Custodian had no right to sell the cemetery to the Jerusalem municipality in 1992. While parties to the work are resting part of their case on what they say was an 1894 ruling by the then Sharia court that the sanctity of a cemetery could be lifted, Mr Sabri said that ruling meant that only a Muslim could make such a decision.

Osnat Goaz, a spokeswoman for the Israel Antiquities Authority, which is carrying out the excavations, said it was common in Jerusalem to build on cemeteries. Adding that in such cases the bones were reburied, she said: "Israel is more crowded with ancient artefacts than any other country in the world. If we didn't build on former cemeteries, we would never build."

Israeli President Moshe Katsav and others said Russian President Vladimir Putin threatened peacemaking prospects if he followed through on his invitation to Hamas to visit after its victory in parliamentary elections on January 25.

Foreign Minister Tzipi Livni warned against what she called a "slippery slope" that could lead other international powers to compromise with Hamas.

Meir Sheetrit, an Israeli cabinet minister and political ally of interim Prime Minister Ehud Olmert, said Israel should consider recalling its ambassador to Russia in protest, and accused Putin of "stabbing Israel in the back."

Putin's surprise overture to Hamas came as a blow to Israel, which wants major powers to boycott Hamas at least until it recognized the Jewish state and renounced violence.

Israel has ruled out negotiating with the group, which masterminded more than 60 suicide bombings against Israelis since 2000 but has largely adhered to a truce declared in March.

"Any weakness... will result in a negative effect -- not only for Israel, but also for the Palestinian people and for the international community," Livni said in an interview with The New York Sun.

Katsav told Israel Radio that Putin's invitation to Hamas was liable to undermine peace prospects.

Senior Israeli officials said Russia, as a member of the Quartet of major powers trying to broker Middle East peace, had a responsibility to shun Hamas.

"It's not just a slap in the face to Israel. It's a slap in the face to Western countries," said one Israeli official, speaking on condition of anonymity because talks with Russia were going on.

The official said the government was "waiting for an explanation" from Russia's ambassador in Israel.

But Russian Defense Minister and Deputy Prime Minister Sergei Ivanov defended Russia's offer of talks with Hamas.

"Hamas is in power, this is a fact, and secondly, it came to power as a result of free democratic elections," Ivanov told reporters at a NATO-Russia meeting in Italy.

He said Moscow was not happy with all of Hamas's policies, but predicted the West had no choice but to deal with it.

"I hazard the prediction that sooner or later certain countries, including those of the Quartet, will be favorable to contacts with Hamas," he said.

France appeared to side with Russia in the diplomatic row.

When asked about Russia's invitation to Hamas, French Foreign Ministry spokesman Denis Simonneau said: "As long as we stay within the framework of the objectives and principles that we have fixed, we think that this initiative can contribute toward advancing our position."

"We share with Russia the goal of leading Hamas toward positions that permit reaching the objective of two states living in peace and security," Simonneau said.

At a meeting in London on January 30, Quartet representatives said the Palestinians risked losing international aid if Hamas did not renounce violence and recognize Israel. Hamas has rejected the demand.

In a bid to shore up international resolve, Israeli Defense Minister Shaul Mofaz will travel to Cairo on Tuesday for talks with President Hosni Mubarak and other officials.

"The rise of Hamas is not just a local problem for Israel, but a strategic threat for all states that seek peace in the middle east," a Mofaz spokeswoman said.

Hamas, which is considered a terrorist organization by Washington, has suggested it could be extended further if Israel gave up land it captured in the 1967 Middle East War.

Senior Hamas official Ismail Haniyeh has said leaders of the group "would be delighted" to visit Russia if Putin tendered a formal invitation.

He also said the Israeli security services and judiciary treated Arabs and Jewish suspects differently.

A Shin Bet veteran, Mr Diskin took over as Shin Bet's chief in May.

His speech to the students at the Eli settlement as they prepared for military service was secretly recorded and broadcast on Israeli TV.

When asked about the growing destabilisation of Iraq, Mr Diskin said Israel might come to rue its decision to support the US-led invasion in 2003.

"When you dismantle a system in which there is a despot who controls his people by force, you have chaos," he said.

"I'm not sure we won't miss Saddam."

Inequality

The security chief was also asked to compare the treatment of Jews and non-Jews by Israel's security and judicial establishments.

"I do not see equality in the way the system handles them when they are guilty of the same type of offence," he said.

"If I had arrested a terrorist from Nablus and Eden Nathan Zaada [an Israeli army deserter who shot dead four Israeli Arabs on a bus in August], they wouldn't have received similar treatment in interrogation or court."

Mr Diskin also said he thought Israeli Prime Minister Ariel Sharon had made a mistake when he withdrew the Israeli army from the Gaza Strip last year without ensuring the Palestinian Authority could fill the security vacuum.

"From a security perspective, I am opposed to handling over territories to the Palestinians unless we know there are officials there who will take control and commit themselves to upholding the law," he said.

"If there are no such officials, then I am against handing over territories to Palestinian control."

But Mr Diskin criticised militant Israelis who have used violence to oppose further withdrawals from the West Bank.

The project, which a spokesman said had been conceived in partnership with the Jerusalem municipality and the Israeli government, was launched at a ceremony in 2004 by a cast of dignitaries ranging from Ehud Olmert, who is currently the acting Prime Minister, to the governor of California, Arnold Schwarzenegger.

The Israeli branch of the Simon Wiesenthal Centre declined to comment yesterday and has had no role in the project.

Durragham Saif, the lawyer who brought the Islamic Court petition on behalf of three Palestinian families, Al Dijani, Nusseibeh and Bader Elzain, all of whom have members buried at the cemetery, said: "It's unbelievable, it's immoral. You cannot build a museum of tolerance on the graves of other people. Imagine this kind of thing in the [United] States or England. And this is the Middle East where events are sensitive. If this goes ahead in this way it is going to cause the opposite thing to tolerance."

Mr Saif said he had written to the Israeli State Attorney, Menachem Mazuz, seeking police enforcement of the original order. He said on a visit to the site he had entered three out of five tents where excavations were being carried out. "I was shocked to see open graves and tens of whole skeletons there," he said.

Ikrema Sabri, the Mufti of Jerusalem, demanded a halt to the excavations and said the Muslim religious authorities had not been consulted on the dig. Saying that the cemetery was in use for 15 centuries and that friends of the Prophet Mohamed were buried there, the Mufti declared: "There should be a complete cessation of work on the cemetery because it is sacred for Muslims."

Under Israel's "absentee property" law the cemetery was taken over by the Custodian of Absentee Property after the 1948 war. Mr Saif said the Custodian had no right to sell the cemetery to the Jerusalem municipality in 1992. While parties to the work are resting part of their case on what they say was an 1894 ruling by the then Sharia court that the sanctity of a cemetery could be lifted, Mr Sabri said that ruling meant that only a Muslim could make such a decision.

Osnat Goaz, a spokeswoman for the Israel Antiquities Authority, which is carrying out the excavations, said it was common in Jerusalem to build on cemeteries. Adding that in such cases the bones were reburied, she said: "Israel is more crowded with ancient artefacts than any other country in the world. If we didn't build on former cemeteries, we would never build."

A number of attempts were made by Jewish groups, including the Anti-Defamation League and the Jewish American Congress, to cancel the conference due to the article and the planned itinerary. The groups condemned the AAUP as well as the Ford Foundation, Nathan Cummings Foundation and Rockefeller Foundation for financing the conference.

AAUP General Secretary Roger Bowen apologized Thursday and explained that, "The article had been collected during our research for the conference. But it was never intended for distribution to the participants or indeed to anyone else."

The AAUP recalled the article, informed all conference participants of the move and promised that, "nothing of this sort will happen again."

The article in question was pubished in the Barnes Review and claims that Zionist movement leaders tried to advance the establishment of the Nazi regime in the 1930's, in hopes that "the tension between the Germans and the Jews would lead to massive immigration to Palestine."

The Jewish organizations expressed satisfaction with the apology, but called for the cancellation or postponement of the conference.

The group said that architects, planners and engineers working on Israeli projects in the occupied territories were "complicit in social, political and economic oppression", and "in violation of their professional code of ethics".

It said that: "Planning, architecture and other construction disciplines are being used to promote an apartheid system of environmental control."

The meeting discussed a boycott of Israel - targeting Israeli-made construction materials and Israeli architects and construction companies - as well as possibly calling for the expulsion of Israeli architects from the International Union of Architects.

A spokesperson for the Israeli Embassy said: "Whoever supports a just solution should refrain from any manner of boycott. It just puts more obstacles in the way of reconciliation in our region.

"If these people care about the Palestinian cause they should help to build bridges not destroy."

Israeli architects denounced the initiative. Ofer Kolker, a leading, London-trained Israeli architect, said it would target a whole group, whether or not individuals were involved in the occupied territories.

"What will they boycott?" Mr Kolker asked. "British architects have never cooperated with their Israeli colleagues. British architects have always had a preference for the Arabs."

There have been several attempts to organise boycotts of Israel, from the virtually defunct Arab League boycott to the attempts to organise an academic boycott at the height of the Intifada. Amnesty International has campaigned against the Irish cement company CRH, which it claims held a large shareholding in a company supplying cement to build the separation barrier.

Earlier this week, the Church of England's general synod voted to divest church funds from companies profiting from Israel's illegal occupation of Palestinian territory. The main target of the plan will be Caterpillar, whose diggers have been used to demolish Palestinian homes. Caterpillar says the US military sold them to Israel, but the church which sell its £2.5m of shares anyway.

Any boycott would aim to embarrass Israel into halting the building of the barrier and settlements, and the "unrestrained destruction" in historic West Bank cities.

Members said that final tactics were not yet decided but they stressed that all options up to an industry-wide boycott were open.

Eyal Weizman, the Israeli director of the Centre for Research Architecture at Goldsmith's College in London, urged action. "A boycott would be totally legitimate," he said. "The wall and the settlements have been deemed illegal by the International Court of Justice and we should boycott any company which does business, any architects that participate - anyone facilitating these human rights violations and war crimes."

Charles Jenckes told The Independent: "There reaches a certain point where an architect can't sit on the fence. Not to stand up to it would be to be complicit."

He said the separation barrier built by Israel was "a contorted, crazy, mad, divisive, drunken thing".

"In 10 years' time its builders will see it as a great folly," he said. "Architecturally it is madness. I understand fully that security is the problem for Israel and they have the right to protect themselves. But this is not the solution.

"It is an extremist measure which forments extremism, by incarcerating and intimidating Palestinians." He called for architects to gradually increase pressure on Israeli. George Ferguson, former president of the Royal Institute of British Architects, who was not at the meeting, said: "It is right that architects should not play a part in building communities and structures that drive people apart."

The biologist Steven Rose, who led the British academic boycott of Israel from 2002, said: "Architecture and planning are an integral part of the fascist apartheid state."