Peres rules out Israeli offensive

Armed Palestinians pray during a funeral procession in Hebron on Wednesday for Palestinians killed in an Israeli gunship strike on Tuesday

JERUSALEM (CNN) -- Israeli Foreign Minister Shimon Peres has rejected speculation of a major offensive to recapture Palestinian-controlled land.

His statement comes amid a massing of Israeli troops around the West Bank after a serious upswing in clashes Tuesday.

CNN's Mike Hanna quoted a government source as saying an Israeli security cabinet meeting Wednesday morning had decided to proceed with a policy of "active self defense," attacking only in response to, or to prevent, threats to security.

But Palestinian leader Yasser Arafat, arriving in Egypt, condemned Israel's recent actions as provocative: "What is happening now with Israeli escalation shows their intention to continue their aggression."

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Both sides have blamed the other for the growing violence, when a U.S.-brokered peace treaty is supposed to still be in force.

In London, Peres said Israel had shown restraint and called on Arafat to end "incitement" and to "put his troops under control."

Peres, who is in Britain for talks with British Foreign Secretary Jack Straw, said the idea Israel would launch a military strike against the Palestinians was "all imagination."

Israeli government spokesman Avi Pazner said Arafat "has to understand this message: Our intention is not more violence. On the contrary, our intention is to get to a point where there's a complete ceasefire and where, after a few weeks we can start talking again with the Palestinians."

In the bloodiest episode Tuesday an Israeli helicopter attacked a building in the Palestinian-controlled town of Bethlehem killing four Palestinians.

An Israeli soldier passes Orthodox Jews walking Wednesday near cement barriers set up to protect Israeli residents from incoming fire in Gilo

Meanwhile, Palestinian militants launched a mortar attack on the Jewish neighbourhood of Gilo on the outskirts of Jerusalem from the Palestinian village of Beit Jalla. No one was hurt but it marked the first time Palestinians have launched mortar fire from the West Bank and a fierce gun battle followed.

Gilo has been a continuing flashpoint with the Israelis considering it a Jerusalem suburb while Palestinians say it is occupied territory.

In the Bethlehem helicopter attack, four Palestinians -- two of them apparently Hamas activists -- were killed and eight others injured. The Israeli military said the building housed militants planning an attack on the Maccabiah Games currently under way in Israel.

A Palestinian source identified Osama Saada, believed to be a Hamas leader, as one of those killed.

In a statement, the Palestinian Authority called the attack "an act of war perpetrated by the Israeli government against the unarmed and innocent Palestinian population."

"It's just a war that is systematic, that is daily, that is incremental, that is indeed debilitating, that is destroying the very fabric of Palestinian reality and infrastructure," Palestinian Cabinet Minister Hanan Ashrawi told CNN.

However, Raanan Gissin, a spokesman for Israeli Prime Minister Ariel Sharon, said Israel was showing remarkable restraint during the nearly 10-month-long uprising.

At least 485 Palestinians, 128 Israelis and 13 Israeli Arabs have died since September when peace talks between Israel and the Palestinians stalled.

Amid continuing international diplomatic manoeuvring, Arafat is to address members of the Arab League at an emergency meeting to discuss the situation in Cairo, Egypt on Wednesday.

Palestinian Minister of Planning Nabil Shaath had said earlier that Arafat would ask the Arab ministers to step up "political and financial support to the Palestinian people, who are suffering from the blockade imposed by the Israeli authorities," Reuters reported.

Peres is in London where he met with British Prime Minister Tony Blair on Wednesday following talks with the British Foreign Secretary Jack Straw on Tuesday, at which Britain urged continuing peace efforts.

"Mr. Straw stressed the need for the full implementation of the Mitchell report," a Foreign Office spokesperson told Reuters.

The report by an international commission, headed by former U.S. senator George Mitchell, called for a cease-fire, confidence building measures, a freeze on Israeli settlement building and denunciation of "terrorism."