Israeli Prime Minister Benjamin Netanyahu said on Tuesday that Israel would reach an agreement with the Palestinians on a pullout from the West Bank by the end of the year.
Israel has been resisting U-S pressure to turn over an additional 13 percent of the West Bank to the Palestinians in return for a Palestinian crack down on Islamic militants.
But the pressure on Netanyahu is also coming from within Israel and his own cabinet with different groups threatening to pull apart his fragile coalition over the issue.
Despite growing U-S pressure on Israel to make a decision on a troop pull out from the West Bank, Israel's Cabinet again failed to reach agreement on the scope of any withdrawal.
Hardline members of the cabinet have already made their positions clear on the U-S plans.
Infrastructure minister Ariel Sharon has said Israel couldn't accept the U-S proposal as certain parts of the West Bank territory are non-negotiable.
A map he presented to the Cabinet two weeks ago reportedly showed Israel keeping two-thirds of the West Bank - even though Palestinians expect to receive at least 90 percent of the territory as part of a final peace settlement.
Far-right Cabinet ministers have threatened to topple the government if Netanyahu agreed to a 13 percent pullback.
They say such a withdrawal would be a disaster for Jewish settlements.
The Jewish Settlers' Council has already launched a campaign to turn Israeli public opinion against a 13 percent troop pullback.
Some observers think Netanyahu's government is split between those who want peace between Israel and its neighbours and the hardliners who refuse to give an inch to the Palestinians.
\"There are at least two distinct groups in Netanyahu's cabinet. There are those who are pragmatists and believe that the peace process is the only way for this government to function and believes that if Israel does not move forward with the pullbacks ultimately this would lead even to violence in the territories. There is another group which is the ideological wing and that ideological wing believes that Israel should not yield any of its
SUPER CAPTION: David Makovsky, political analyst
Recent polls have suggested that a large majority in Israel want Netanyahu to forge ahead with the peace negotiations and agree to a troop withdrawal.
Among the opponents to a withdrawal is Michael Kleiner, head of a group of right-wing legislators called the Land of Israel Front.
Kleiner believes that Netanyahu might succeed in getting the majority for a pull out in the Knesset but only with Labour party support.
But if Netanyahu went for that it would bring about the collapse of his government.
\"For the withdrawal itself he may have a majority because the Labour opposition will support him, but for the continuing operation of his government he will loose the majority so practically a decision about such a big second redeployment means new election
because the government will not have any more a parliamentary majority.\"
SUPER CAPTION: Michael Kleiner, right wing member of Parliament
Since his election in 1996, Netanyahu has tried to appease the United States with declarations of unwavering support for the peace process while at the same time giving as little as possible to the Palestinians.
This approach contrasts with that promoted by the opposition Labour party who are waiting to see Netanyahu's next move.
\"We are not dealing with speculations, when there will be a clear decision that had been made, we will respond. Our basic position is well known. We are supporting the peace process and at the same time we don't have a drop of confidence in Netanyahu's government.\"
SUPER CAPTION: Ehud Barak, head of the Labour opposition party
Israel's continued indecision is likely to further strain ties with the United States which has demanded an Israeli answer within days to its proposals.
However, U-S ultimatums to Israel have come and gone in the past month without repercussions.
It appears that Netanyahu has been more concerned about the survival of his government than about possible U-S censure.