Israeli Defence Minister Shaul Mofaz said Israeli troops would withdraw from Palestinian towns a day before the 9 January vote, and stay out for 72 hours.
Palestinians, he said.
The temporary withdrawal was aimed at avoiding clashes with the
A Palestinian official said the sides agreed to have polling stations in post offices in East Jerusalem, as they did in a 1996 vote.
The official added that Palestinians would have at least five polling stations in East Jerusalem, which they want as that capital of a future state, and that ballots would be tallied outside the municipal borders.
Palestinians had said there could be no ballot if Jerusalem residents were excluded.
Palestinian voting in Jerusalem is contentious as both Israel and the Palestinians lay claim to the eastern part of the city, even though it was under Palestinian control prior to 1967.
East Jerusalem was seized by Israel in the 1967 Arab-Israeli war and annexed in a move rejected by the UN and the international community, but supported by the US.
Israeli and Palestinian officials met secretly in Jerusalem last week to discuss January's scheduled election for president of the Palestinian Authority, according to an Israeli television station.
Uraiqat (L) met Israeli officials
in secret regarding elections
It said that Dov Weisglass and Shalom Turgeman, two close aides of Israeli Prime Minister Ariel Sharon, met Palestinian negotiations minister Saib Uraiqat and Hasan Abu Libda, head of prime minister Ahmad Quraya's office.
The men discussed a temporary withdrawal by the Israeli army from the main Palestinian towns on the day of the election, and for Palestinian police to be authorised to carry arms for the time of the poll.
A Palestinian official had confirmed that the meeting had taken place.
According to him, the two sides agreed to apply the same set up as during the 1996 presidential election, which enabled Palestinians in annexed East Jerusalem to participate.
Bassam al-Salhi is among the
candidates harassed by Israel
"It's not a voting district of the Palestinian Authority, but there are Palestinian voters there who are eligible to vote and they will vote in absentee ballots," said Raanan Gissin, a spokesman for Sharon.
Palestinian officials reacted coolly, saying Israeli troops should leave Palestinian areas immediately to allow candidates to campaign, and rejected the notion of an interim peace deal.
"We have signed lots of interim agreements, and all of these agreements failed," said the Palestinian Cabinet secretary,Abu Libda.