"We are not making it a condition," he continued, "but we expect Israel to freeze settlements at a very early stage after the start of negotiations."

And 78 percent of the Jewish leaders questioned said Israel should freeze Jewish settlements in return for a $10 billion United States loan guarantee.

For Israel, he said, it would mean agreeing during that phase to freeze new settlements in the territories.

This, they speculate, may be an excuse to freeze settlements without saying so.

Israel, seeing this as an attempt to force it to freeze settlements, insists it cannot accept an imposed cessation or freeze.

Asked if Israel would freeze settlements or evacuate outposts it considers illegal, Mr. Sharon said: "That's a sensitive issue.

The report recommends, among other things, that Israelis freeze settlements, that Palestinians crack down on terrorism and that both sides halt violence unconditionally.

Even Foreign Minister Shimon Peres, long viewed as the leader of the Israeli "peace camp," has also rejected the committee's call to freeze settlements.

One option was that it could freeze only planned settlements, but complete only those already under construction, and receive $2 billion in loan guarantees for one year.

Secretary of State Madeleine K. Albright had asked him to freeze such settlements until relations with Palestinians improved.