"Sharon deliberately stopped the negotiations. This was a political decision and a tragic error," former justice minister Beilin told public radio.
"Sharon knows that we can reach an agreement with Abbas but he is not prepared to pay the price and he took advantage of this incident very quickly to break off dialogue," added Beilin who, along with Abbas, was one of the chief architects of the 1993 Oslo peace accords.
Beilin warned that his party would stop giving Sharon a safety net in parliament for his controversial plan to pull troops and settlers out of the Gaza Strip later this year if the prime minister "ruins the option of peace".
Yahad has six MPs in the 120-seat parliament and their support for the premier's so-called disengagement plan is vital to its chances of success.
Sharon ordered an indefinite freeze on all contacts with the Palestinian Authority (PA) on Friday in the wake of a resistance attack on the Karni border crossing between Israel and Gaza which left six Israelis dead.
Three Palestinian resistance groups claimed responsibility for the incident.
Meanwhile, Egyptian President Husni Mubarak said in remarks published on Sunday that peace between Israel and Syria was harder to achieve under the hardline Israeli Prime Minister Ariel Sharon than his predecessors.
Sharon has ordered an indefinite
freeze on all contacts with the PA
Syria said in December it wanted peace talks with Israel over the occupied Golan Heights to resume without any preconditions, but Israel said it opposed peace talks while Syria hosted Palestinian resistance groups in Damascus.
Syria says Israel should not set conditions of its own for renewing the talks which foundered in 2000, mainly over control of the eastern shores of the Sea of Galilee.
Mubarak said Israeli-Syrian peacemaking opportunities had been lost under former Israeli prime ministers Yitzhak Rabin and Ehud Barak, both from the centrist Labour party.
"In the days of Yitzhak Rabin, he said he would give the Golan entirely to Syria in return for the establishment of two embassies in Damascus and Tel Aviv," Mubarak said in extracts of an interview printed in state media.
"But they delayed and the opportunity was lost. Likewise, it was lost with Barak and now the issue has become harder with Sharon"
"But they delayed and the opportunity was lost. Likewise, it was lost with Barak and now the issue has become harder with Sharon," he said.
Israel seized the Golan Heights in the 1967 Arab-Israeli war.