Israel has announced it is to postpone indefinitely its withdrawal from Bethlehem and nearby Beit Jala.
Fierce fighting broke out in the West Bank town of Bethlehem and near Nablus earlier today, just hours before Israel was expected to begin the first phase of a staged withdrawal from Palestinian areas it occupied last week.
Senior Palestinian negotiator Saeb Erekat said the postponement showed Sharon's wanted to pursue the path of destruction and violence and not the path of negotiations and peace.
A senior Israeli security source said Israel would re-examine its decision only if Palestinians keep the calm and their commitments.
Earlier, Israeli troops killed a Palestinian activist from Yasser Arafat's Fatah faction during a tank incursion into the heart of the West Bank city of Tulkarm, according to hospital officials.
Palestinian hospital sources and witnesses said that Firas Jaber, 24, was killed after three Israeli tanks drove about a kilometre into Tulkarm, prompting a fierce gunbattle with local Palestinians. Witnesses said tanks fired shells and heavy machineguns.
The Israeli army said it was checking the report.
The fighting came shortly before Israel announced that it had called its withdrawal from the West Bank city of Bethlehem and Beit Jala.
The pullbacks were to have been the first phase of a withdrawal from Palestinian-ruled areas that Israel reoccupied last week following the assassination by Palestinan militants of extreme right-wing Israeli Tourism Minister Rehavam Zeevi.
More than 40 Palestinians, and one Israeli, have been killed since Zeevi's murder, which was carried out to avenge the Israeli assassination of the leader of the militant Popular Front for the Liberation of Palestine in August.