Prime Minister Ariel Sharon said Sunday that peace cannot be achieved in the Middle East without massive reforms in the Palestinian Authority and an end to terror.

In a 20-minute speech to the central committee of his conservative Likud Party, Sharon said ``peace is possible'' if those two conditions are met, and he proposed a phased approach to peacemaking.

Sharon asked the members of his party not to vote Sunday on whether there should be a Palestinian state in a final peace agreement, a subject that threatens to sharply divide Likud.

``Any decision taken today on the final agreement is dangerous to the state of Israel and will only intensify the pressures on us,'' he said.

The crowd erupted in boos and jeers and some people began chanting their support for former Prime Minister Benjamin Netanyahu, who was proposing a resolution opposing the creation of a Palestinian state.

The crowd remained raucous and angry for several minutes. Netanyahu, who had been mercilessly heckled during his own speech just moments before, rose to ask the crowd to respect Sharon.

Earlier in his speech, the crowd was far more supportive of Sharon as he outlined some of the successes of Israel's recent incursion into Palestinian-controlled territories in the West Bank and insisted Israel would not tolerate terrorism.

``There can be no peace with terror, with a man of terror,'' he said. ``To make real peace for generations, we must beat the terror. There is no other way.''

``Peace is possible, but there must be two basic conditions,'' Sharon said. ``First, a complete halt to the terror, the violence and incitement. Two, the Palestinian Authority must carry out internal reforms in every way — on security, the economy, the legal system and within society.''

``Only afterward, when we see how the Palestinians are building their society and self-government, after we are convinced that their faces are turned toward peace, then we can move toward discussions on the exact nature of our relations,'' he said. ``Only then can we sign on a final peace agreement.''

He also reiterated his support for a regional peace conference, something Netanyahu strongly opposed.

``The nation of Israel wants peace,'' he said.