Israeli Prime Minister Ehud Olmert said on Sunday that Israel cabinet was "very close" to deciding on how to respond to continued rocket attacks from the Hamas-run Gaza Strip.

Israeli Foreign Minister Tzipi Livni indicated Sunday Israel may uproot some of its West Bank settlements as part of a peace accord with the Palestinians. Livni spoke at the start of a meeting Sunday with visiting U.S. Secretary of State Condoleezza Rice. VOA's David Gollust reports from Jerusalem.

The reconciliation talks between Hamas and Fatah are moving to the next level, and will be presented during the Arab League summit in Syria on Saturday.

Thousands of Israelis have rallied in small town that has been the target of Palestinian rockets. As Robert Berger reports from VOA's Jerusalem bureau, the Israeli government is facing mounting public pressure to take decisive military action in the Gaza Strip to halt the rocket fire.

US President George W Bush who is on a visit to Israel to revive the stalled Mid-East peace mission urged the Jewish country to end its occupation of the West Bank.

President George W. Bush began his Middle East trip in Israel where he met with Israeli President Shimon Peres and Prime Minister Ehud Olmert.

Israel has announced two new housing projects in East Jerusalem and the West Bank, continuing to expand its settlements. Officials have stated that a bill to be approved by parliament this week, would set aside $25 million for the expansion of development projects in Har Homa and Maale Adumim. The bill would create 500 apartments in the Har Homa area and another 240 in Maale Adumim.

Israel agreed to let about 900 Gaza pilgrims travel through Israeli territory en route to a Muslim pilgrimage in Saudi Arabia, Palestinian and Israeli officials said.

There has been a mixed reaction in Israel and the Palestinian territories to the Annapolis Mideast peace conference. VOA's Jim Teeple spoke with Palestinians in the West Bank city of Ramallah, and with Israelis in Jerusalem about how they view Tuesday's conference.

A Vatican official supposes that Palestinian refugees have the right to return to their homeland. He hopes Israeli-Palestinian peace talks would address the issue.

United States President George W Bush says it is the "right time" for peace between Israelis and Palestinians, but has admitted the road would be difficult as he readied to open a major international gathering.

US President George W Bush has held separate meetings with the Israeli and Palestinian leaders before all of them attend the much anticipated Middle East peace conference in the historic American city of Annapolis.