Israel is proposing a troop pullout from two more Palestinian towns in the wake of meetings between the two sides' leaders and U.S. President George W. Bush, officials said Wednesday.

The handover, along with release of Palestinian prisoners, an Israeli security barrier going up along the West Bank and Israel's demand to dismantle violent Palestinian groups were on the agenda for a meeting Wednesday between Israeli Defense Minister Shaul Mofaz (search) and Mohammed Dahlan (search), the Palestinian minister in charge of security, officials on both sides said.

The Israeli Defense Ministry said that the meeting was taking place at a hotel outside Jerusalem.

On Tuesday, Israeli Prime Minister Ariel Sharon discussed the issues with Bush, following a Friday talk between Bush and the Palestinian premier, Mahmoud Abbas.

Palestinians were disappointed with the results of the Bush-Sharon summit, charging that the president took Israel's side on the outstanding issues, contrasting with their upbeat assessments of the earlier Bush-Abbas meeting.

Bush seemed to back off from overt criticism of the security barrier, called on Palestinians to dismantle violent groups and supported Israel's position that Palestinian prisoners accused of terrorism could not be released.

Israel's imprisonment of about 7,700 Palestinians has become a main point of contention. Israel has agreed to free several hundred, but the Palestinians want a mass release, and militant groups are threatening to call off their truce unless the prisoners are released.

About 200 Palestinians marched in Gaza City on Wednesday to call for prisoner releases. Nafez Azzam of Islamic Jihad (search) said Israel's proposal to release several hundred was "as if someone is trying to throw dust in our eyes."

Nabil Abu Rdeneh, an aide to Palestinian leader Yasser Arafat, criticized Bush's statements, which did not set a schedule for implementing the peace plan or stopping construction of a security barrier between Israel and the West Bank. He said Bush's stand "shows a regression from the road map and from the promises from the U.S."

Some Israeli peace activists were also dismayed by Bush's failure to press Sharon to take steps toward accommodation with the Palestinians.

Columnist Gideon Samet wrote in the Haaretz daily that Bush had missed a chance. The twin summits "could have been a turning point if President Bush wanted one, [but] it didn't happen ... the initiative won't last long at the current pace of implementation."

At a news conference Wednesday in Washington, Bush praised Abbas vision of peace.

"I believe him when he says that we must root out terror in order for a Palestinian state to exist," Bush said.

Sharon insists that Palestinians must disarm militants before Israel takes any irreversible steps. However, Palestinians charge that in the meantime, Israel is the one that is taking steps contrary to the plan — expanding West Bank settlements and building the barrier. In Jordan on Wednesday, Abbas called the barrier "racist."

Palestinians object to the security barrier between the West Bank and Israel because its route cuts deep into the West Bank in some places to encircle Jewish settlements. Palestinians demand all of the territory for a state.

Mofaz and Dahlan were to discuss the next step under the "road map" formula of ending violence and restoring Palestinian control over population areas of the West Bank. The "road map" leads through three stages to creation of a Palestinian state in 2005.

Israel withdrew from the West Bank town of Bethlehem and much of Gaza shortly after the main Palestinian groups declared a temporary halt to attacks against Israelis on June 30, significantly reducing violence over the past month.

At Israeli-Palestinian meetings before the round of Washington talks, Israel said it would pull out of two more towns, turning them over to Palestinian security. Officials said the proposal would be discussed at the Mofaz-Dahlan session. According to media reports, the towns are Qalqiliya (search) and Jericho (search).

Qalqiliya is at the edge of the West Bank, just a few kilometers (miles) from the Israeli city of Kfar Saba. A new north-south Israeli toll road passes next to Qalqiliya, and a high concrete barrier has been built next to the road to stop Palestinian snipers from firing at cars from Qalqiliya.

Jericho is an isolated oasis in the Jordan River valley, largely bypassed by nearly three years of violence. Except for a brief invasion on Sept. 12, 2001, Israeli forces have not entered the town, and Palestinian police have been in control there. A "handover" under the road map would formalize the status quo.

Also Wednesday, an Israeli military court sentenced a leading militant, Ahmed Barghouti, to 13 life sentences after convicting him of orchestrating attacks in Tel Aviv and Jerusalem that killed 12 people. Barghouti, 27, is an aide and cousin to Marwan Barghouti (search), a Palestinian uprising leader also trial in Israel, charged with murder.