Israeli caretaker prime minister Mr Ehud Barak's cabinet has declared officially that proposals made during the last round of peace talks with the Palestinians were no longer valid.
The news comes after a series of meetings with Prime Minister-elect Mr Ariel Sharon over forming a new coalition government, amid continued clashes with Palestinians and pressure from a unifying Arab world.
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Mr Ariel Sharon
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The two leaders met for an hour at the prime minister's office this morning after a first round of transition talks on Friday, when they also spoke about the possible formation of a national unity government.
A negotiating team from Mr Sharon's right-wing Likud party was to resume talks later today with representatives of Mr Barak's Labor party on the possibilities of a coalition government.
The call for a national government has made gains in the Labour ranks, with its endorsement from both Mr Barak and former prime minister and senior statesman Shimon Peres, who is also leading the negotiations.
Mr Sharon is believed to have invited Mr Barak to serve as defence minister, and Nobel peace laureate Mr Peres to be foreign minister.
But Israeli newspapers reported Mr Barak had rejected the offer, saying he would stick to his promise to resign after his electoral defeat.
Israel's response to the Palestinian uprising, in which nearly 400 people have died since September, has prompted widespread international criticism, including from the United Nations, which is sending three experts to the region to investigate alleged human rights violations.
Military radio said yesterday that Israel would not cooperate with the commission, which it said had already judged that Israel has committed "war crimes," but commission member John Dugard said the panel would carry on with its work anyway.
Five Palestinians were reportedly shot by Israeli gunfire during clashes yesterday and a house damaged by shelling from an army tank.
Arab leaders, who began a a two-day meeting in Amman yesterday, called on Mr Sharon not to take his country off the path of peace.
Mr Sharon said on Friday he planned to meet Palestinian leader Mr Yasser Arafat but signalled he would take a tough line in any peace talks and refrain from talks as long as there is violence on the streets.
US President George W Bush asked Arafat to give Mr Sharon "a chance to form a government, and a chance to do what he said he wanted to do, which is promote the peace in the region."
Mr Arafat said yesterday he would wait before reacting to the changes from Washington.
"We must wait and see what comes," he said.
AFP