A Palestinian with an assault rifle hidden in a prayer mat killed two Israeli soldiers Tuesday at a West Bank (searchcheckpoint. The attack, however, failed to derail efforts toward an Israeli-Palestinian summit.

The violence came a day after the two sides hinted at progress toward a truce to halt three years of violence.

Despite the renewed fighting, the Israeli and Palestinian prime ministers will meet next week, Israeli Foreign Minister Silvan Shalom said Tuesday after meeting with Secretary of State Colin Powell (searchin Brussels, Belgium.

Palestinians, however, said results had to be assured in advance.

The meeting between Israel's Ariel Sharon (searchand Palestinian Ahmed Qureia (searchcould be key to reaching a cease-fire and jump-starting the U.S.-backed "road map" peace plan that envisions a Palestinian state by 2005.

Tuesday's violence underscored the difficulties that remain.

Israeli tanks entered a Palestinian refugee camp in Gaza, sparking a gun battle in which nine Palestinians and an Israeli soldier were wounded.

Three hours earlier, a lone Palestinian, carrying an assault rifle hidden in a rolled-up Muslim prayer mat, approached an Israeli army checkpoint just after daybreak on a road leading from a bloc of West Bank settlements to Jerusalem. The gunman killed one soldier and mortally wounded another.

Sgt. Maj. Shlomi Belski was off duty and talking to his mother by cellphone when the attacker opened fire. Relatives told Israel Radio she heard the shots and listened as her son was evacuated to a hospital. He died en route.

The gunman escaped into nearby Bethlehem, the military said. Soldiers entered the town to search, the first such raid since Israel handed security responsibility for Bethlehem back to the Palestinians in July.

There was no claim of responsibility for the attack, which was an embarrassment to Qureia at a time when he is trying to win support for a cease-fire.

Israeli Cabinet ministers repeated their demand that Palestinian militant groups must be dismantled.

Qureia, whose full Cabinet took office last week, has said his first priority is a negotiated truce to end three years of violence, not a crackdown.

A senior U.S. official said Tuesday the Palestinians must have security forces capable of fighting terrorism, but Israel must create better conditions for Palestinians by lifting restrictions. The official spoke on condition of anonymity during President Bush's flight to England.

Hamas spokesman Mahmoud Zahar took a hard line on a truce. In a meeting with reporters late Tuesday, Zahar said, "Our position depends on our national demands. Otherwise we are not going to accept."

Zahar, whose group does not accept the presence of a Jewish state in the Middle East, would not define the demands. Earlier, Hamas officials said Israel must stop all military activities, halt construction of a security barrier along the West Bank and release Arafat from a two-year siege.

Egypt is at the forefront of efforts to forge a truce. Intelligence chief Omar Suleiman met Monday with Palestinian officials and faction leaders and invited them to Cairo for talks next week.

Suleiman is also expected to issue an invitation Wednesday for representatives of the main militant groups, Hamas and Islamic Jihad.

Justice Minister Yosef Lapid of the moderate Shinui Party said Qureia must take action, but Israel should not overreact. "One terror attack will not change the history of the Middle East," he said.

This came as Lapid's party issued a peace plan that calls for removing the isolated settlement of Netzarim in the Gaza Strip as a show of good faith toward the Palestinians.

He said the plan calls for Israel to stop settlement expansion and remove illegal outposts -- also requirements of the road map.

Sharon opposes evacuating any settlements, charging that it would be a sign of weakness. But the move by Shinui, which has 15 seats in the 120-seat parliament, underscored the growing pressure on Sharon.

"We must end the stalemate and move along the road map," Lapid told Israel TV. "As a condition, the Palestinians must take steps to end terrorism, but we are not telling them how to do it."

Meanwhile, Palestinian Cabinet Secretary Hassan Abu Libdeh said no date had been set for an Israeli-Palestinian summit despite the foreign minister's announcement Tuesday.

"We would like the Israeli government to take enough time to prepare for a good meeting with real results, instead of being engaged in a public relations campaign," he said.

Qureia said Tuesday a positive outcome must be assured. Sharon met four times with Qureia's predecessor, Mahmoud Abbas. But Palestinians complained there were few concrete results, a reason why Abbas resigned Sept. 6 after just four months in office.

The Palestinians demand that Israel remove roadblocks and other restrictions that have crippled Palestinian life. Israel says the measures are necessary to keep attackers away from its cities.

A senior Israeli official with Sharon in Rome said late Tuesday that if the Palestinians declare a truce, Israel would halt targeted killing of Palestinian militants, unless they pose a direct threat of a terror attack.

In Gaza, 25 Israeli tanks drove into the Rafah refugee camp before dawn Tuesday, firing as they advanced and drawing return fire from gunmen, said a resident, Ahmed Abu Gezer. Troops demolished two houses, including one belonging to a man whose 14-year-old son was killed by army fire 10 days ago, residents said.

The army said in a statement that the raid was meant to find and destroy weapons-smuggling tunnels, and one was found, the fifth this month.