Peres told Israel Radio that "I think a one-sided realignment plan has disappeared because of what happened in Gaza and what happened in Lebanon."

Israel must consider other ways to proceed in talks with the Palestinians, Peres said, adding that "we have to find a way to move forward."

Israeli Prime Minister Ehud Olmert said on Saturday that he intended to meet with Palestinian National Authority (PNA) Chairman Mahmoud Abbas to revive Middle East peace negotiations.

But he stressed that securing the release of the Israeli soldier captured by Gaza militants was top of the agenda ahead of any meeting with Abbas on a stalled road map peace plan.

According to Olmert's realignment plan, thousands of Jewish settlers will be unilaterally evacuated from large areas of the West Bank and beef up others in drawing Israel's final borders, even without reaching peace agreement with the Palestinians.

However, many Israelis began to doubt the plan's feasibility after militants in the Gaza Strip tunneled into southern Israel and attacked an Israel Defense Forces post, killing two soldiers and kidnapping one, despite Israel's withdrawal from Gaza.

Since the beginning of the Lebanese war, Israeli has been also reluctant to agree to a West Bank withdrawal, according to Peres.

Abbas was referring to international sanctions imposed after Hamas secured a surprise victory in the Palestinian Authority election in January, ousting the long-dominant Fatah party. The sanctions have left the Hamas-led government unable to pay civil servants for months.

During talks with his British counterpart on Saturday, Olmert said he "stands fully" ready to meet with Abbas without prior conditions such as the release of Cpl. Gilad Shalit, an Israeli soldier being held captive by militants with links to Hamas. Abbas and Olmert have not meant since June, when Shalit was captured.

During his visit to Ramallah, Blair said the international community should restore contacts with the Palestinian government if Hamas forms a unity government and accepts demands outlined by the Quartet of Middle East peace brokers.

The Quartet, consisting of the United States, European Union, United Nations and Russia, wants Hamas to renounce violence, recognize Israel and accept previous peace agreements with the Jewish state. The European Union and the United States froze all direct financial aid to the Palestinian government after Hamas formed a government in March.

Blair sees window of opportunity'

Blair said despite a series of setbacks in the Middle East in the past several months, he believes there is now a "window of opportunity" to try to work toward peace once again.

"I believe that such a government, based on the Quartet requirements, does offer the possibility of re-engagement by the international community," Blair said.

A spokesman for the Hamas-led Palestinian government, Sami Abu Zuhri, said Sunday his group is ready to form a coalition government with the Fatah party run by Abbas, but "not according to the standards that are dictated."

Sami Abu Zuhri told reporters that Hamas nominated Haneya as prime minister of a coalition government, and Abbas approved the nomination.

Abbas and Haneya met in Gaza Sunday night. According to Abu Zuhri, a senior Hamas official who attended the meeting, the meeting was "positive and fruitful" and focused on a national
unity government.

"Major progress was achieved during the meeting, particularly the political program of a proposed government," he said.

The coalition's agenda would be in line with the Prisoner's Document of National Accordance that calls for a two-state solution, he said.

Small sections of the Jordan's upper portion, near the Sea of Galilee, have been kept pristine for baptisms. But
Israel, Jordan and Syria have siphoned off huge amounts of river water to meet their needs in this arid region, and pumped waste water back in.

Hardest hit is the 60-mile downstream stretch - a meandering stream from the Sea of Galilee to the Dead Sea.

Environmentalists say the practice has almost destroyed the river's ecosystem.

Now Christian evangelicals have teamed up with environmentalists to save the Jordan. They want UNESCO to declare the entire Jordan Valley and river a World Heritage Site, hoping it will force all countries involved to work together to save it.

"If there's irreversible damage done ... Israel's going to have another PR battle on its hands," said David Parsons, a spokesman for the evangelical Christian Embassy in Jerusalem, which has joined forces with Friends of the Earth Middle East, a green group.

Rescuing the river could take decades, environmentalists say.

The damage began in 1964, when Israel began operating a dam that diverts water from the Sea of Galilee, a major Jordan River water provider, to the national water carrier, said Hillel Glassman, a stream expert at Israel's Parks Authority. At the same time, Jordan built a channel that diverted water from the Yarmouk River, another main tributary of the Jordan River.

Syria has also built reservoirs that catch the Yarmouk's waters. In a year, the Yarmouk's flow into the Jordan River will dwindle to a trickle, once Syria and Jordan begin operating a dam they jointly built, he added.

Environmentalists blame all three countries.

The 1994 Israel-Jordan peace treaty contained provisions for rehabilitating the river, said Munqeth Mehyar, chairman of Friends of the Earth Middle East in Amman.

"They simply did not implement what came in the agreement," he said. "The violation took place much before and not only by the Jordanians and the Israelis, but also the Syrians."

The three countries replenished the river with sewage water, agricultural runoff and salt water, Glassman said. The freshwater foliage that once flourished along the river's banks has been replaced with saline vegetation.

"Almost no fresh water is flowing down the Jordan River anymore," said Mira Edelstein, an expert on the Jordan Valley for Friends of the Earth Middle East. "It's true there are springs along the way which replenish it a little bit, but unfortunately it has become the ... dumping yard of the countries."

Overpumping and mineral extraction by Israeli and Jordanian companies are also drying up the Dead Sea, the lowest point on earth, with the shoreline receding three feet a year. The southern third of the lake is gone, and the experts doubt the famously salty lake can ever be rehabilitated.

Hadas Shamir, a masseuse at a spa in Ein Gedi, an Israeli resort on the Dead Sea, remembers that when she moved to the area from South Africa in 1978, the shoreline was just 30 feet from the road. Today, the spa has to drive its guests a mile to the water.

Visitors flock here to sightsee and bathe in mineral-rich waters. "People who believe the Dead Sea is good for them will still continue coming. I don't know how much longer the sea will be there for them," Shamir said.

Back at the baptismal site, Marilyn Spence, 54, of Plano, Texas, was disappointed to hear the river's ecosystem had been ruined, but said it didn't diminish the life-changing experience she had on her visit.

"To read about it is one thing, but to really be here and to be in the place that Jesus was baptized, it's really an emotion that you can't describe," Spence said. "Saying yes to Jesus Christ is the ultimate, it's just the ultimate."

Not only do Palestinians in Gaza get little to eat but what food they have is eaten cold because of the lack of electricity and money to pay for fuel. The Gaza power plant was destroyed by an Israeli air strike in June. In one month alone 4 per cent of Gaza's agricultural land was destroyed by Israeli bulldozers.

The total closure imposed by Israel, supplemented by deadly raids, has led to the collapse of the Gazan economy. The 35,000 fishermen cannot fish because Israeli gunboats will fire on them if they go more than a few hundred yards from the shore. At the same time the international boycott of the Hamas government means that there is no foreign aid to pay Palestinian government employees. The government used to have a monthly budget of $180-200m, half of which went to pay 165,000 public sector workers. But it now has only $25m a month.

Aid agencies are frustrated by their inability to persuade the world that the humanitarian crisis is far worse in Gaza than it is in Lebanon. The WFP says: "In contrast to Lebanon, where humanitarian food aid needs have been essentially met, the growing number of poor in Gaza are living on the bare minimum."

It is possible for foreign journalists to visit Gaza but it is a laborious process passing through the main Israeli checkpoint at Erez and then walking down a long concrete tunnel. The kidnapping of two Fox television employees by criminals - though they were later released - has also dissuaded several TV companies from covering the crisis.

The total closure imposed by Israel dates from the seizure of Cpl Gilad Shalit by Palestinian militants on 25 June. Between then and the end of August, Israeli security forces killed 226 Palestinians, 54 of them minors, in the Gaza Strip, according to the Israeli human rights organisation B'Tselem. Of these it says that 114 were taking no part in any hostilities.

The quickest way to alleviate the crisis would be for Israel to allow the Rafah crossing into Egypt to reopen, according to the mayor of Gaza City. But any restoration of the economy would require the reopening of the other crossing points at Erez and Karni.

* Israel lifted its sea blockade of Lebanon yesterday after an interim maritime task force led by an Italian admiral deployed off the Lebanese coast, the commander of UN peacekeepers said.

The Hamas government is keen on meeting the Palestinians' aspirations and establishing peace within a format that respects and restores their rights, Al-Aaraj added.

He said many issues have been agreed on; however, certain sides are proposing some amendments on the Palestinian national reconciliation document on such points as the two co-existing states formula. He would not express his own opinion on this matter

Israel has not told Egypt about its electric fence, and does not plan to, according to Israeli sources. But Israeli officials don't believe their neighbor will object to the fence.

Israeli officials have said the fence is part of a plan to create "a sterile triangle" between Israel, Egypt and Jordan which will be sealed shut and will serve as an obstacle to anyone who tries to infiltrate it.

No evidence has been found that anyone crossed that border to carry out attacks inside Israel, but Israel is saying that 'anti-terrorism' is one of the main reasons behind the electric fence construction.

The fence construction will begin near Eilat, in southeastern Israel, and the first section, mainly already in place, will run 12 km from Netafim to Gesharon.

The fence will also include security cameras installed along its entire length.

The change in approach has far-reaching and dire humanitarian, social and economic repercussions, Israeli and Palestinian critics say.

It is already separating foreign spouses from their families in the West Bank and the exclusion of expatriates promises to erode the Palestinian middle class and further harm the depressed Palestinian economy, the critics warn.

"This is one of the more blatantly unjust and blatantly stupid things the government of Israel has ever done," Gershon Baskin, head of the Israeli-Palestinian Centre for Research and Information, said.

The shift comes as Israel steps up its expansion of Jewish settlements in the West Bank, this week issuing 700 tenders for new Israeli housing there.

Shlomo Dror, an Israeli spokesman, said "thousands" of people would be hit by the new approach. From Israel's point of view, he said, "they are not Palestinians, they are people who have another nationality, who have foreign passports. They came in as tourists."

Mr Dror blamed the Palestinian Authority for the plight of the expatriate Palestinians, saying it had not made gaining residency for them a priority as part of a family unification quota before 2000, when Israel froze family reunification at the start of the Palestinian uprising.

He disputed claims that the change would have a dramatic economic impact.

"When there is no peace process the economy will continue to be very bad. For the Palestinians, the economic problem is less important than continuing fighting."

Sam Bahour, a Palestinian-American who moved from Ohio 11 years ago to his father's home town of al-Bireh in the West Bank and helped set up the Palestinian phone company, Paltel, is one of those faced with de facto expulsion.

"I have not disrupted my children's life yet and will continue to buffer them as much as possible from this sadistic Israeli policy," he said.

Mr Bahour has three weeks to go on what an army official wrote in his American passport is his "Last Permit".

His wife, Abeer, and children, Areen, 12, and Nadine, six, have Palestinian identity cards because Abeer grew up in the West Bank. They can remain. But Israeli authorities rejected Mr Bahour's request, first made in 1994, for residency and he has remained on a tourist visa.