"The prime minister has decided not to go to Washington. He will be having consultations here in Israel regarding the disengagement plan," his office said on Sunday, referring to the initiative voted down by the right-wing Likud party one week ago.
Sharon had been scheduled to address a policy conference of the American Israel Public Affairs Committee, a pro-Israeli advocacy group, on 17 May, and aides said last week a meeting with US President George Bush was likely.
But with the fate of the Gaza plan still unclear and an Arab world seething over what it sees as Bush's pro-Israeli slant and US abuse of prisoners in Iraq, the timing for talks with Sharon might not have been right.
There was no immediate comment from the White House.
"It will take me another three weeks to put the plan together and then I will present it to the government," a political source quoted Sharon as telling his bickering cabinet at its weekly meeting.
Memorial ceremony shooting
Also on Sunday, a fierce gun battle broke out between Palestinian fighters and Israeli occupation soldiers during a memorial ceremony in the Gaza Strip for an Israeli settler killed with her four children.
About 300 Jewish settlers gathered for a religious ceremony on the site of the attack on the Kissufim road leading to the Gush Katif settlement bloc, when Palestinians opened fire on them, without causing casualties.
Settlers took cover after
Palestinian fighters opened fire
Responding to the attack, an Israeli tank fired three shells on a number of Palestinian houses in al-Qarara district in Khan Yunus, said Aljazeera's correspondent in Gaza.
"The rounds hit a number of houses. Ambulances could not reach the area", she added.
The head of Israeli forces in the region, Colonel Shmuel
Zakai, told public television that: "The Palestinians fired from a house in the northern section of the city of Khan Yunus, about a 100m from where the ceremony was being held."
However, an Israeli military official told reporters: "The soldiers had responded to intense automatic weapons fire from Palestinians on vehicles driving on the Kissufim main road."
Israeli military authorities later said at least one Palestinian resistance fighter had been killed.
Two armed Palestinian resistance groups, Islamic Jihad and the Popular Resistance Committees, claimed responsibility for the 2 May attack on 34-year-old Tali Hatuel and her four daughters.
In a separate incident in the West Bank on Sunday, a Palestinian man was shot by Israeli occupation soldiers in Abu Dis - north of Jerusalem, Palestinian hospital sources said.