They have reportedly worked out tentative deals on issues involving permits for new Jewish housing, control of water supplies and the height of buildings surrounding the Jewish enclave.

The Palestinian reaction was evidently also fueled by anger over Israel's earlier decision to build new Jewish housing in East Jerusalem.

The Palestinians, for their part, blame the breakdown on Israel's construction of Jewish housing at Har Homa, in East Jerusalem.

Tensions over Jerusalem were heightened in recent weeks by Israel's confiscation Arab-owned land in the city, mostly for Jewish housing.

The more than 200,000 settlers in Palestinian territory would make "separation" a nightmare, as would Jewish housing planted in Palestinian areas of Jerusalem.

They said they would remain until the Palestinians put a stop to shooting from there into nearby Jewish housing.

In just over a month, Israel will make its planned request for $10 billion in American loan guarantees to build Soviet Jewish housing.

It will free up Israeli soldiers who have been devoted to the defense of far-flung clusters of Jewish housing surrounded by hostile Palestinians.

Your Feb. 27 editorial's opposition to approval for more Jewish housing in Israeli-occupied East Jerusalem implicitly affirms this view.

Even since the Oslo accords, Israelis have continued to build Jewish housing in Arab neighborhoods.