As the standoff at the Church of the Nativity reached the one-month mark Thursday, Israeli troops opened fire on three armed Palestinians who emerged from the holy site, killing one and wounding two and prompting return fire from gunmen inside.

The siege in Bethlehem is the last major Israeli-Palestinian impasse that remained unresolved after a month of incursions, sieges and standoffs in the West Bank. Some 200 people remain holed up there, including 30 Palestinians wanted by Israel.

The city's mayor predicted the standoff would soon be over, resolved in the same fashion as the standoff at Yasser Arafat's compound in Ramallah. The Palestinian leader left his headquarters early Thursday for the first time in four months after agreeing to allow six Palestinians wanted by Israel to be transferred to a Palestinian jail under the supervision of the United States and Britain.

Arafat is "deeply interested in solving the problem and I am sure that very soon this crisis at the Church of the Nativity will be solved in line with the principles of what happened in Ramallah," said Bethlehem Mayor Hanna Nasser, who is part of the Palestinian team negotiating with the Israeli army. "I think everybody will buy this."

In a development in Bethlehem Thursday, 10 Western activists dashed across Manger Square and entered the church, delivering food to those inside. The Israeli army detained 13 others who served as a decoy, the activists said from a mobile phone inside.

With Israel's exit from Arafat's compound and the rest of Ramallah, troops are now gone from all Palestinian cities in the West Bank that they invaded at the beginning of last month -- except Bethlehem. While about 75 Palestinians and a few clergymen have trickled out of the church over the past month, negotiations remain deadlocked.

In the latest of several gunbattles, Israeli troops fired Thursday on three armed Palestinians who emerged from the besieged church and walked into Manger Square. One was killed, while the two others staggered back into the shrine, the army said. The Palestinians fired back and shooting went on for about 15 minutes.

The body of the dead man, one of the wounded Palestinians and a third man who had fallen sick during the standoff were later evacuated from the shrine.

That shootout came only hours after a fire broke out in the compound during another gunbattle, this one in the middle of the night. The flames damaged several rooms and offices, but not the 4th-century basilica itself.

The Fransciscan press office in Rome said several rooms and offices in the Franciscan monastery in the compound sustained fire damage. Palestinians in the compound said several rooms in the Greek Orthodox section were also damaged.

The Palestinians said the fire, which burned for a half hour, was sparked by Israeli flares shot into the church compound during the nighttime fighting. Israel initially accused the Palestinians of arson, but Col. Miri Eisin of Israel's military intelligence later said that after viewing video footage, Israel was checking whether the flares did indeed spark the flames.

The fighting erupted during Orthodox Easter week, a day before Good Friday, according to the Orthodox calendar. The residents of biblical Bethlehem have been confined to their homes by an Israeli military curfew since forces invaded the biblical town April 2, in pursuit of suspected Palestinian militants. It was partially lifted for the holiday.

Several parts of the compound have been damaged by bullets and fires during the standoff, though the church itself appears to have suffered only minor damage. Independent observers have not been able to see the full extent of the damage because the Israeli military has closed the area.

Mayor Nasser said Thursday that the gunmen wanted by Israel should be put under U.S. and British supervision at a jail in the West Bank town of Jericho, as were the six others from Arafat's compound. He noted, however, that the wanted gunmen at the church have not been formally accused or convicted of any crime, though Israel alleges most or all have been involved in violence.

Any gunmen found guilty of a crime would remain under U.S. and British supervision in Jericho, while those found innocent would be released, Nasser added.

Israel has been demanding that the wanted gunmen be tried in Israel or sent into exile. The Palestinians have said the gunmen should be sent to the Palestinian-controlled Gaza Strip.

One of the activists who slipped into the church Thursday said people inside needed food.

"We are going to stay here until it's over," said Robert O'Neill, one of several Americans who made it inside.

O'Neill said a photographer with the Los Angeles Times followed the activists into the church and later contacted the Israeli army to arrange safe passage out of the compound. The Times' bureau in Jerusalem referred inquiries to newspaper headquarters in Los Angeles, where a spokesman was not immediately available for comment.

In Jerusalem, Cardinal Roger Etchegaray, a papal envoy, met separately Thursday with Israeli President Moshe Katsav and Arafat to try to resolve the standoff.

"I come to ask that everything be done ... to solve as soon as possible the tragic situation of Bethlehem and that the Basilica of the Nativity be restored to God," Etchegaray said after his meeting with Katsav.