Palestinians called off talks set for Wednesday to end a weeklong Israeli siege of Yasser Arafat's office in the West Bank town of Ramallah, complaining that Israel would not allow international negotiators to meet Arafat first.

Israel maintained its grip on the ravaged compound while easing curfew restrictions in other parts of Ramallah, defying a U.N. Security Council resolution and pressure from the United States, Europe and the Arab world to pull back.

One consequence of the siege is a halt to efforts to reform Arafat's regime, said a top official, Mahmoud Abbas. Abbas, also known as Abu Mazen, is Arafat's deputy and has been mentioned as a possible prime minister if the Palestinians decide to appoint one to take over some of Arafat's duties in the framework of reforms.

But Abbas said there can be no talk of reforms "while our president is under such cruel and unprecedented aggression." Abbas told The Associated Press that he has been meeting with other reform-minded Palestinians, but they have discussed only how to end Israel's siege.

Israel, Europe and the United States have joined many Palestinians in demanding reforms in Arafat's unwieldy and corrupt regime.

Israel sent tanks and bulldozers into Arafat's compound last Thursday after a Palestinian homicide bomber blew up a Tel Aviv bus, killing himself and six other people.

On Monday, the U.N. Security Council passed a resolution demanding that Israel end the siege, pull its forces back toward the lines they held before violence erupted two years ago, while condemning attacks on civilians and calling on the Palestinians to put those responsible for terror attacks on trial.

Israeli Foreign Minister Shimon Peres said Israel cannot carry out the resolution "because the other part will not be fulfilled," charging that Palestinian security forces are not stopping militants from carrying out attacks.

White House press secretary Ari Fleischer was asked at his daily briefing with reporters whether Peres' refusal of the Security Council demand to end operations around Ramallah and withdraw from Palestinian cities could be compared with Saddam Hussein's defiance of U.N. resolutions.

"I think you have to be very careful when you equate Iraq with any other nation, and say Israel and Iraq are the same, when they are not," Fleischer said. "The president does feel strongly about the need for Israel to listen and to heed the call and to make certain that its efforts do not hurt the cause of reform in the Palestinian Authority. The president has spoken out about that directly in opposition to Israel."

Israeli Defense Minister Binyamin Ben-Eliezer, like Peres a member of the moderate Labor Party, set a different condition for ending the blockade, demanding the surrender of 19 terror suspects in Arafat's office. "The rest are not important," he told Israel Radio.

Israel has changed its demands several times, according to the Palestinians. Until Ben-Eliezer spoke, Israel was saying it would not withdraw from the compound until about 200 people holed up inside surrender, among them 50 allegedly involved in attacks on Israelis, including Palestinian intelligence chief Tawfik Tirawi.

Tirawi denied the allegations in an interview with the Israeli daily Maariv and vowed not to surrender. "Yasser Arafat and I will fight to the last minute," Tirawi said.

Ben-Eliezer said talks were underway to resolve the standoff, but Palestinians canceled a meeting with Israeli officials set for Wednesday because Israel refused to allow representatives of the so-called Quartet to meet with Arafat first, said Palestinian Cabinet Minister Saeb Erekat, the chief negotiator.

The Quartet is made up of the United States, United Nations, European Union and Russia, working for a solution to the Israel-Palestinian conflict.

Elsewhere in the West Bank, Israeli forces blew up three houses of Palestinian terror suspects, two in the tense, divided city of Hebron and one in the nearby town of Dura.

In recent weeks, Israel has been demolishing houses of suspected militants, saying the measure can serve as a deterrent.

Reporters Without Borders, a group defending the rights of journalists, issued a statement Wednesday criticizing Israel for the death of Palestinian radio reporter Issam Tilawi in Ramallah early Sunday.

The group said he was shot by an Israeli sniper while wearing a "press" sign, charging that his killing was a "serious violation" of international rules about protection of civilians in wartime. Four Palestinians were killed in the clashes.

In violent incidents Wednesday, Palestinians fired three rockets at an Israeli village near Gaza, hitting a building, the miltiary said. Nobody was hurt in the attack, the army said.

Two Israelis were wounded by Palestinian gunfire in a roadside shooting in the West Bank, the military said, and Palestinians said 15 people were wounded, one seriously, in a clash with Israeli forces in the Gaza Strip. An Israeli military officer said only four rubber-coated bullets were fired, charging that the Palestinians were faking injuries.