The Israeli army began withdrawing this evening from areas it reoccupied in the Gaza Strip the day before, a senior Palestinian official said.
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Our people on the ground saw the beginning of the pullout, the official, who asked not to be identified, told reporters.
Another Palestinian official said Israel had informed the Palestinian Authority it was extracting its soldiers from the territory they seized late yesterday.
Israel Radio said Prime Minister Ariel Sharon informed the United States of the decision, after Washington publicly called for Israeli troops to leave areas into which they moved after a Palestinian mortar bomb attack on a town in southern Israel.
"We always said that it will happen when the military operation ends", said Mr Raanan Gissin, a spokesman for Sharon. The Israeli military reoccupied parts of Gaza during its fiercest air and naval missile assault on Palestinian security targets in the Strip since an uprising against Israeli occupation began in September.
Earlier an Israeli general said Israeli troops could remain for months in territory they have recaptured from the Palestinian Authority.
"We will remain in these places for as long as it takes - days, weeks, months", Brigadier-General Yair Naveh, commander of the army's Gaza brigade, told reporters on the Israel-Gaza border.
Israeli troops moved overnight into several Palestinian-controlled areas of the Gaza Strip, dividing the region into three parts, after five mortar bombs hit the town of Sderot in southern Israel.
It was the deepest mortar bomb attack inside Israel since the Palestinian uprising began in September.
This is a flagrant violation of the agreements and will lead to increased tensions. The Israelis must withdraw immediately from these occupied areas, Mr Tayeb Abdel Rahim, Palestinian President Yasser Arafat's top aide, told reporters.
Israel has accused the Palestinians of violating the interim agreements by having mortar bombs in their arsenal.
"The use of military might will not bring peace. They have to sit down and begin negotiations on final-status talks and implement signed agreements otherwise the vicious circle of violence will continue", Mr Rahim said.
Israel reoccupied a northeast corner of the Gaza Strip, opposite Sderot, and several roads further south where army checkpoints blocked Palestinian movement, effectively dividing the area into three parts.
General Naveh said the aim of the army operation was to prevent such mortar attacks, which he said bore the fingerprints of the Palestinian Authority , an allegation Palestinian officials have denied in the past.
This operation is mainly a defensive one. Its aim is to create and stabilise a line that will enable our citizens, in Sderot and other communities in the area, to sleep peacefully, General Naveh said.
Israel handed over parts of the Gaza Strip to Palestinian self-rule under interim peace deals.
After the attack a 14-year-old Palestinian boy was killed by an Israeli bullet near the Karni crossing between the Gaza Strip and Israel, medical sources said.
Israeli Prime Minister Mr Ariel Sharon ordered the assault after five mortar bombs fired from the largely Palestinian-ruled strip into the southern Israeli town of Sderot about five km away.
There were no injuries and no damage.
The Israeli strikes targeted Palestinian security posts in the fiercest and most widespread raids of seven months of violence.
Gaza City's main police headquarters and two locations of the Palestinian Force 17 security unit were among at least seven main targets in the four-hour attack.
The attacks come less than 24 hours after Israel's first bombing raid on a Syrian target in Lebanon for five years.
Egyptian President Hosni Mubarak met with Palestinian leader Yasser Arafat today to discuss the deteriorating situation.
Meanwhile, Israel today closed for an indefinite period of time the Egyptian-Israeli border crossing in the Rafah area of the Gaza Strip, an Egyptian border official said.
The Egyptian border official said 25 vehicles carrying aid and other goods to the Palestinians were stranded on the Egyptian side of the border, but that Israel had told Egypt humanitarian aid would still be allowed through.
The Egyptian official said Israel refused 22 Palestinians entry yesterday, before the border was officially closed. Another 50 Palestinians were turned back at the Israeli side of the crossing after having completed their procedures on the Egyptian side, he said.
There was no official Egyptian reaction to the closing of the border.
AFP