U.N. leader Kofi Annan made a strongly worded appeal to Israel on Wednesday to end its military campaign in the West Bank, saying that he was "appalled" by the dire humanitarian situation caused by the Israeli offensive against Palestinians. 

Annan and other world leaders urged both sides to work toward a negotiated settlement, Israel to withdraw its forces immediately, and Palestinian leader Yasser Arafat to denounce and dismantle terrorism networks in Palestinian camps. "Terrorism, including suicide bombing, is illegal and immoral," the officials said. 

But their joint communiqué was far more balanced than Annan was in personal remarks in which he clearly blamed Israel for human rights violations and made no reference to Palestinian fighting. 

The U.N. secretary-general said Israel's crackdown, launched to find militants responsible for a series of terror attacks on its civilians, was causing a "mounting humanitarian and human rights crisis" in Palestinian areas. 

Annan called this unacceptable from Israel. 

"Respect for international humanitarian law and the humanitarian organizations is the most basic requirement for any nation that lays claim to democracy and membership in the international community." 

"I am, frankly, appalled by the humanitarian situation," Annan said after discussing the Mideast violence with U.S. Secretary of State Colin Powell, Russian Foreign Minister Igor Ivanov, European Union security chief Javier Solana and Spanish Foreign Minister Josep Pique. 

He said Israel's assault was causing "enormous suffering for the innocent civilian population caught up in the hostilities" in the West Bank and Gaza Strip. 

Annan said the international community demands that Israel "honor its obligations under international humanitarian law to protect civilians" and for its troops to stop damaging and destroying personal property. 

Annan made the comments after a meeting at which the EU, Russia, the United States and the United Nations jointly urged Israel and the Palestinians to halt their "senseless confrontation," saying it caused a humanitarian crisis and heightening regional tensions in the Middle East. 

Powell, who plans to see Arafat and Israeli Prime Minister Ariel Sharon this week, has offered U.S. observers to monitor a truce he hoped to broker. 

In the background of the Madrid meeting, Germany was drafting a blueprint for peace to be formally presented at a meeting of EU foreign ministers in Luxembourg on Monday. 

It calls for a cease-fire and withdrawal of Israeli troops, followed by an early declaration of a Palestinian state, an end to Jewish settlements in Palestinian areas, and phased talks on such tricky issues such as Israel's borders and the status of Jerusalem, the German government said. 

It also provides for international peacekeepers to patrol a buffer zone between Israel and the Palestinian areas. 

The plan combines elements of U.S. and Saudi proposals but notably "departs from the principle of small steps and looks much more toward the final status," Chancellor Gerhard Schroeder's office said. 

Also Wednesday, the European Union's Parliament called for the 15-nation bloc to "suspend immediately" its trade and cooperation agreement with Israel. 

While the resolution is nonbinding, it is expected to add growing pressure to EU foreign ministers who will consider sanctions against Israel at their Monday meeting.