The political sources said on Tuesday the tenders were frozen earlier to avoid upsetting the US.

One source said the decision was intended to defuse resistance in Sharon's Likud party to his Gaza pullout plan and to bring centre-left proponents into his coalition.

Likud members are to convene on Wednesday to vote on a link-up with the Labour party. 

The sources said the tender package did not flout recent understandings with Washington that new Jewish housing in the occupied West Bank - where Palestinians are in revolt - would be built within existing settlement boundaries. 

US assurance

The sources pointed out that US President George Bush had assured Sharon in April that if he carried out his "disengagement" from Gaza, Israel could count on retaining parts of the West Bank with some large settlements, under any future peace deal with Palestinians. 

Israel is counting on retaining 
large West Bank settlements

But Washington has also been pressing Israel to dismantle proliferating settler outposts and curb settlement expansion to help revive an internationally backed peace "road map", promising Palestinians a viable state in the West Bank and Gaza. 

Political sources said the tenders involved housing in seven settlements Sharon had vowed never to cede. 

The "disengagement" plan entails removing all 21 Gaza settlements containing 8000 Jews while retaining larger West Bank enclaves with most of the 240,000-strong settler population. 

Inspection team

Meanwhile, it was announced a US delegation was to inspect Israel's settlement activity in the West Bank. US embassy spokesman Paul Patin said the team was expected to arrive next month to "monitor Israel's compliance with the roadmap in terms of settlement activity."

"We expect Israel to abide by its commitments in the roadmap," Patin added. US Secretary of State Colin Powell recently told Israeli Foreign Minister Silvan Shalom of his "disappointment" over the lack of action by the government. 

"We expect Israel to abide by its commitments in the roadmap"

Paul Patin,
US embassy spokesman

And sources close to US ambassador Dan Kurzer said he had voiced impatience on Monday over the outposts, in talks with senior Israeli Defence Ministry official Baruch Spiegel. 

A close aide of Sharon said the prime minister "was doing his utmost to fulfil his commitments" under the road map, but that settlers were slowing up the dismantling process by resorting to the courts. 

"We are a state of law. We cannot act above the law otherwise the settlers could do much the same," the aide told AFP on condition of anonymity.