The Palestinians and Israel agreed Wednesday on a plan for a gradual Israeli withdrawal from areas of the West Bank and Gaza Strip but the deal appeared to flounder later in the day when Palestinian officials said Israel had changed the terms.

Israeli Defense Minister Binyamin Ben-Eliezer laid out a proposal last week under which Israeli troops would gradually begin withdrawing from Palestinian-ruled parts of Gaza and the West Bank town of Bethlehem, in exchange for Palestinian guarantees that no attacks would be launched from these areas.

The Palestinian Cabinet accepted the proposal on Wednesday and Palestinian security officials and members of Israel's Shin Bet security services met later in the day to map out the details.

However, Palestinian officials emerged from the meeting and accused Israel of changing its offer. They declared the session a failure.

Calls placed to Israeli officials were not immediately returned.

Regardless, the Cabinet approval had been provisional pending the outcome of the meeting, and obstacles were still likely even if it were finalized.

The dispute came as Israeli tanks and armored vehicles rumbled deeper into the northern Gaza Strip for the second night in a row, firing machine guns and at least one shell to knock out the electric transformer in the town of Beit Lahiya, Palestinian security officials and residents said.

Troops were going house to house, conducting searches, said Mayor Mohammed al-Masri. There were no immediate reports of injuries; an incursion of more than two hours in the same area early Wednesday left one Palestinian policemen dead.

Earlier, top officials of Palestinian leader Yasser Arafat's Fatah movement denounced the Cabinet decision, saying it had been taken without their consultation and amounted to a betrayal of the Palestinian struggle for the past 22 months of fighting.

In Washington, meanwhile, a senior Palestinian delegation arrived for talks with Secretary of State Colin Powell and other U.S. officials.

The delegation's head, Saeb Erekat, bristled at a blunt critique of the Palestinian leadership by Defense Secretary Donald H. Rumsfeld a day before.

Rumsfeld said the Palestinian Authority was entangled with terror and that he doubted Israel could turn over territory to it because of its poor track record.

Rumsfeld also referred to the West Bank as "so-called occupied territory," signaling he does not share the Bush administration's view of Israel's presence on the land, captured by Israel in the 1967 war.

After the meeting between Palestinian and Israeli security officials, Arafat aide Nabil Abu Rdeneh said Israel had imposed new conditions on the Palestinians in the talks that were "impossible to accept or even to implement."

He wouldn't elaborate except to say that Israel hadn't mentioned withdrawing from Bethlehem in the talks, just Gaza, and he declared the meeting a failure.

Israeli troops have been holding some Palestinian-run areas of Gaza since sometime after the outbreak of fighting nearly two years ago, and reoccupied seven of the West Bank's eight major towns and cities in June in an attempt to prevent attacks on Israelis.

Fatah's rejection of the pullout plan -- presented by Israeli Defense Minister Binyamin Ben-Eliezer -- cast a shadow over any potential deal. Fatah officials said the group's central committee -- made up of 17 Palestinians whose support is critical to Arafat -- would meet Thursday to discuss the decision.

"The Ben-Eliezer plan is like treating cancer with aspirin," said Jibril Rajoub, a central committee member and the recently fired head of preventive security in the West Bank.

He said Fatah now had to act on its own to represent the true needs of Palestinians "far away from personal interests of a group of individuals within the Palestinian Authority."

In other developments Wednesday, a truck carrying diesel fuel exploded after a small bomb underneath it detonated, police said. The driver was slightly injured.

Police spokesman Gil Kleiman said it was too early to tell if criminals or Palestinian militants were responsible.

Also Wednesday, police said two 19-year-old Arab Israeli women had been arrested on suspicion they failed to tell authorities about an impending homicide bomb attack on a bus Sunday that killed nine people.

The two got off the bus in northern Israel after the bomber told one of them that "something horrible" was going to happen, said Ilan Harush, a local police chief in northern Israel.

Israeli troops, meanwhile, launched several strikes against Palestinian terror suspects Wednesday that left six people dead.

In the deadliest, Israeli troops killed Ziad Daas, a local leader of the Al Aqsa militia in the West Bank town of Tulkarem, and three other Palestinians.

Daas had been wanted by Israel for alleged involvement in the execution-style killing of two Israeli restaurant owners in Tulkarem in December 2000. Israeli security sources said he also was responsible for a shooting attack on a Hadera banquet hall in January that killed six people.

Witnesses said Israeli commandos, backed by jeeps, armored vehicles and helicopters, surrounded Daas' hide-out Wednesday morning. Gunmen opened fire from inside the building, and witnesses said Daas was on the roof when he was shot by a sniper.

Three other people died, including one taken to an Israeli hospital, Israeli security sources said. An army spokesman said 16 militants were arrested in the operation.

In the Gaza Strip town of Khan Yunis, a 26-year-old Hamas activist, Hussam Hamdan, was shot and killed while sitting on the roof of his house, relatives said.

Israeli security sources said Hamdan was planning attacks on Israelis and had overseen militants who planted bombs in the Gaza Strip and fired mortars at Jewish settlements and army outposts.

Early Wednesday, Israel sent between 15-30 tanks and armored vehicles into the northern Gaza Strip, firing shells and machine gunfire at houses near the Jebalya refugee camp.

A 28-year-old Palestinian policeman died after being shot in the head, apparently by a stray bullet, as he slept on his roof, hospital officials said.

The Israeli military said troops were shot at and returned fire. It said three wanted Palestinians were arrested during searches.

In Bethlehem, troops arrested Yehiyeh Daamseh, a local leader of the Al Aqsa Martyrs' Brigade militia accused of dispatching several homicide bombers to Israel. In one attack attributed to Daamseh, 11 Israelis were killed in a Jerusalem bombing in March.

Palestinian security officials said troops discovered an explosives belt in the one-story house Daamseh had rented.