The Israeli daily Maariv reported on Tuesday that Sharon was planning to unveil a plan for a major army redeployment, the total evacuation of the Gaza Strip, and the dismantling of several Jewish settlements in the occupied territories.
"All the Jewish settlements in the Gaza Strip will be evacuated. At the end of the process, isolated settlements in Judea and Samaria will be evacuated," the daily said, using the Israeli term for the West Bank.
Sharon is expected to outline his plan at an annual conference on security issues in the northern Israeli city of Herzliya on Thursday.
In recent weeks, the government has been maintaining a drip feed of declarations on unilateral measures Israel could take should efforts to resume talks with the Palestinians fail.
"We use all kinds of archaic terms like Greater Israel and other loaded terms that are no longer relevant," Trade Minister Ehud Olmert said in Herzliya.
"If there's no agreement reached, we must do something because we cannot wait forever," said Olmert, who is also deputy prime minister.
US President George Bush has warned Israel against "decisions that make it hard to create a Palestinian state" and fall outside the framework of the roadmap peace blueprint his administration sponsored.
State Department spokesman Richard Boucher has elaborated, welcoming unilateral steps to withdraw Jewish settlements but stressing that this would not be a substitute for a negotiated peace deal.
Armed settlers are common in
"Unilateral steps, even positive ones, don't resolve the issue, don't constitute a settlement. A settlement can only be reached by negotiations between the parties."
The Palestinians oppose non-negotiated decisions that might affect their future state and fear any redeployment would be considered definitive by Israel, whether or not it matches
Sharon would also be poised for a showdown with Jewish settlers who have promised their former champion a "war" should he press on with plans to dismantle settlements.
While isolated Gaza settlements have always looked like the first to be removed as part of an evacuation plan, the steps outlined by Maariv would also imply dismantling the Gush Katif bloc where the most settlers in the strip live.
Sharon and his government are getting a foretaste of the kind of opposition they could face with the settlers mobilising against the planned evacuation of West Bank outposts.
Zeev Hever, who is behind the creation of West Bank outposts and is a close friend of Sharon's, launched a campaign against evacuations planned by the government, which he accused of giving up on Zionism.
Zeev Hever, who is behind the creation of West Bank outposts launched a campaign against evacuations planned by the government, which he accused of giving up on Zionism
"Transferring Jews from their land amounts to folding the flag of Zionism. Those who choose this path are mentally ill," he told a press conference in Migron, near Ram Allah, which is one of two inhabited outposts slated for removal.
Israeli troops are due to dismantle Migron on Thursday.
Leaflets reading: "We'll be there on D-Day," have been distributed to all settlements in the Ram Allah region and the Migron secretary said his aim was to bus 10,000 people to the outpost within minutes of the first moves by the army.
"We are calling for a struggle on the political and legal levels and on the ground," Hever said, while calling on settlers to refrain from violence.
Israel is enjoying the longest lull in Palestinian resistance attacks since the start of the intifada in September 2000, but Shin Beth chief Avi Dichter warned Tuesday that it created a false impression of quiet.
An Egyptian delegation arrived in the Gaza Strip on Tuesday to restart discussions aimed at reaching a suspension of anti-Israeli attacks, after earlier talks in Cairo attended by Palestinian prime minister Ahmed Quraya failed.
Two deputies to Egyptian intelligence chief Umar Sulaiman held talks with Arafat's mainstream Fatah and were due to meet a delegation of the Islamic Resistance Movement, Hamas.
Egyptian delegation meeting with
Hamas leader Shaikh Ahmad Yassin
In Gaza City, the radical Popular Front for the Liberation of Palestine reacted warily to a possible freeze in anti-Israeli attacks after a round of talks with the Egyptian officials.
"We want to maintain Palestinian national unity," Jamil Majalawi, a PFLP leader, said. "According to the Egyptians, the Americans are ready to insist that Israel respect a possible truce."
But he added, "The United States does not inspire trust and we want Israel to stop its attacks, release its Palestinian prisoners and stop building the wall." He was referring to Israel's controversial apartheid wall on the West Bank.
Meanwhile, German Foreign Minister Joschka Fischer was in Amman as part of a Middle East tour that will include meetings in Israel and the Palestinian territories on Wednesday.
While in Cairo on Tuesday, he said there could be a "window of opportunity" to begin implementing the US-backed "roadmap" for peace.