The move comes as the PM vowed action to deal with an increasingly vocal group of extremist Jewish radicals on Monday.
Sharon said he regretted the move, but was anxious to avoid a repeat of the Yitzhak Rabin assassination nine years ago.
"It saddens me that I, who have spent my life protecting Jews, have to now be defended against Jews," the former general was quoted as saying by Israeli media.
Toning down the language
Senior officials are to meet this week to look at legal means to curb potentially inflammatory statements from ultra-nationalists.
Justice Minister Yosef Lapid said Sharon had asked for action to "uproot incitement".
"It starts with incitement and then it moves on to threats. With Rabin it started in the same way and you never know how it will end," said one security source.
Once a champion of illegal settlements, Sharon aims to uproot all 21 Jewish communities from Gaza by the end of 2005.
He also plans to withdraw from four of 120 settlements in the West Bank as part of a plan to "disengage" from years of conflict with the Palestinians.
Polls show most Israelis back the initiative to shift the 7500 Jews who live in Gaza alongside 1.3 million Palestinians.
But settlers and religious radicals oppose ceding any land that Israel captured in the 1967 Middle East war, seeing it as part of a heritage bestowed by God.
They also reject Sharon's plan, arguing that it is a reward for Palestinian resistance to occupation.
The head of the Shin Bet internal security agency, Avi Dichter, told a cabinet meeting on Sunday he was concerned at rising right-wing extremism and worried about prospects of an escalation in violence.
Israeli troops scuffle with settlers
as they dismantle an illegal outpost
"As a result of our unfortunate experience, it would be worth taking precautions," cabinet member Gideon Ezra, a former deputy chief of the Shin Bet, told Israel Radio.
He said that even if there was "some exaggeration" of the risks, Israelis "should be cautious and alert others".
Pro-settler rabbis called on the Shin Bet to show solid evidence for its warning. But a leading rabbi called on clergymen to be careful "and not say anything that could be interpreted as a call to fight" the government.
Israel's attorney-general is due to meet Dichter and other security officials this week to discuss legal ways to prevent incitement.
A Jerusalem rabbi drew criticism last week for saying that anyone handing over part of Israel to a non-Jew could be killed under a historic law of "Rodef" - a licence to kill someone who intends to kill someone else.
Last month, a settler leader also stated that violence - not the use of firearms - was a legitimate form of resistance against forced evacuation.
"I cannot promise that the struggle will be clean and sterile. He who decides to uproot Jews wounds Israeli society severely. I don't want to predict or threaten - I don't know how far it will go," said Pinchas Wallerstein of the Yesha settlers' council.