Prime Minister Ariel Sharon (search) told his stunned Likud Party (search) on Monday he plans to dismantle 17 Israeli settlements in the Gaza Strip -- his most specific comment yet on unilateral steps if peace talks fail, participants in the meeting said.

Sharon spoke to Likud lawmakers just hours after telling the Haaretz daily he has "given an order to plan for the evacuation" of the Gaza settlements, which are home to about 7,500 Israelis.

"I don't know if it will be done in one go, or gradually, but over the course of time, it will not be right to continue Jewish settlement in Gaza," a Likud official quoted Sharon as telling the legislators. Sharon referred to Jewish settlement in Gaza as "a security burden and a source of continuous friction," said the official, speaking on condition of anonymity.

Though Sharon indicated he was referring to all the settlements in Gaza, his spokesman, Raanan Gissin, said late Monday that three at the northern tip of the territory, close to Israel, would remain. Though most lists count 17 settlements, Gissin said there were 21.

Gissin said there were three plans, but none of them called for removing all the settlements. The ones in northern Gaza would remain, he said, because "there is not the element friction" there. Earlier, Sharon had been quoted as saying it's possible all Israelis would have to leave Gaza.

Sharon has said recently he would take unilateral steps, including removing some settlements and imposing a boundary on the Palestinians, if there is no progress in stalled peace efforts by summer.

In the Gaza refugee camp of Rafah, meanwhile, Israeli soldiers killed four Palestinian militants in an intense gun battle. The dead included Yasser Abu Ayish, leader of the Islamic Jihad military wing in the Rafah area, whose legs and arm were blown off last year when a rocket he was building exploded.

He was high on Israel's wanted list.

Sharon's plan was met by widespread skepticism in Israel and the Palestinian areas. Moderate and ultra-nationalist Israeli legislators alike said they found it difficult to believe Sharon, a patron of the Jewish settlement movement for years, would take action against a core constituency and risk the fall of his center-right coalition. Some suggested Sharon was trying to deflect attention from corruption investigations of him.

Palestinian leader Yasser Arafat (search) also expressed disbelief. "Seventeen trailers (settlements)? What, so they can replace them with another 170?" he said.

Sharon told Likud legislators that his "disengagement program" from the Palestinians is not yet complete. He said he has asked Israel's National Security Council to "examine options and to begin with the Gaza Strip," according to the Likud official.

The prime minister said he would seek the approval of parliament and would also consult with President Bush, participants in the meeting said.

Sharon's coalition controls 68 seats in the 120-member parliaments. Political analyst Hanan Crystal said 13 legislators from two far-right parties -- the National Union and the National Religious Party -- would bolt if Sharon moves to evacuate settlements, bringing down the government and possibly forcing snap elections.

The opposition Labor Party could save Sharon from an election, but may not do so because of the ongoing police investigation of him, Crystal said.

The pro-settler NRP threatened Monday to quit the government. The party "cannot be participating with a Cabinet that is destroying the settlements," said NRP member Shaul Yahalom. An umbrella group representing Gaza settlements also said it would try to topple the Sharon.

Said Siyam, a Hamas leader in Gaza, said that "such a withdrawal, if it happens, will be as a result of the resistance," a reference to Hamas attacks on Israeli soldiers and settlers.

Sharon did not tell Haaretz when the dismantling would begin, but suggested it could take some time. "It's not a simple matter," Sharon was quoted as saying.

"We are talking of thousands of square kilometers of hothouses, factories and packing plants. People there who are third-generation. The first thing is to ask their agreement, to reach an agreement with the residents," he said. "It's not a quick matter, especially if it's done under fire."

The army said troops came under fire at the Rafah refugee camp as they attempted to arrest Abu Ayish at his home and returned fire. The army confirmed three gunmen had been killed, while one soldier was lightly injured.

Palestinian witnesses said four people, including Abu Ayish, his brother and militants from Hamas and Al Aqsa Martyrs' Brigades, were killed. One side of Abu Ayish's home was destroyed.

Neighbors said Abu Ayish moved around with the help of prosthetic legs and a special car provided by Islamic Jihad. The car was destroyed by the army.

Later Monday, the army entered the Aida refugee camp near Bethlehem for what military sources called a "pinpoint" operation aimed at a Hamas militant. A Palestinian homicide bomber who killed 11 people in Jerusalem last week had come from the camp.

The army said it had come under fire when it approached the activist's house and fired back, killing him. Israeli rescue workers said four soldiers were wounded, two of them seriously.

The Israeli operations came a day after soldiers carried out a similar raid in the West Bank town of Jericho. One militant was killed.

David Baker, an official in Sharon's office, described the raids as pre-emptive "search and arrest" operations.

Senior Israeli and Palestinian officials, meanwhile, are scheduled to meet Wednesday in hopes of bringing their prime ministers together for a summit, a senior Palestinian official said.

A summit between Sharon and Palestinian Premier Ahmed Qureia would be a key step toward resuming long-stalled peace talks. The two have not met since Qureia took office in October.