The cash advances could be available by August under a draft proposal by a government committee working out the details of a Gaza pullout plan that Prime Minister Ariel Sharon's cabinet has approved in principle, the officials said on Friday.
Payouts before a planned March 2005 Cabinet vote on whether to begin removing settlements could force a showdown between Sharon and hardliners in his coalition, bringing it closer to collapse, political analysts said.
Sharon earlier clashed with the powerful settler lobby when the committee proposed voluntary evacuations begin in two weeks.,
Settler advocates believe the cash advances are attempts to make settlers evacuate quietly and quickly.
Eran Sternberg, a spokesman for Gaza settlers, said most had signed a declaration refusing to leave or to negotiate payouts.
UN help offered
Government officials estimated the average payout per household at $300,000, based on the number of family members and the size of agricultural plots.
Such a sum would be enough to buy a one-family house with a garden or a large apartment in many communities in Israel.
Sharon's proposal pushes for the
removal of all Gaza settlements
UN General Secretary-General Kofi Annan told Sharon the international community was ready to offer assistance and resources to ensure the plan's successful implementation, Sharon's office said in a statement.
The total government bill - including a troop withdrawal from Gaza and removal of four West Bank settlements also scheduled to go - could come to more than $1.5 billion.
Israeli media reports said Sharon hoped to push settler compensation legislation through parliament by late July.
But it is unclear whether his government can last that long. Sharon lost his parliamentary majority on Tuesday when two
members of the pro-settler National Religious Party defected
from his coalition.
The NRP has still to make a final decision on whether to stick by the prime minister. Its departure from the government would likely spur Sharon to seek a partnership with the pro-pullout Labour Party or force early elections.
Sharon's plan calls for the removal of all 21 settlements in Gaza, a sandy coastal strip where 7500 settlers and 1.3 million Palestinians live, and four of 120 in the West Bank, which is home to some 230,000 settlers and 2.4 million Palestinians.