Israeli police arrested prominent Palestinian peace campaigner Sari Nusseibeh (searchon Wednesday, saying he illegally employed West Bank Palestinians at the university he heads.

Prime Minister Ariel Sharon (search), meanwhile, began personally contacting members of his Likud Party in a stepped-up effort to boost support for his plan to withdraw from the Gaza Strip. The party is holding a referendum on his plan Sunday, and polls show the race is too close to call.

In Gaza, a large bomb went off early Thursday at the house of Gaza police chief Ghazi Jabali (search). The official had just left the site and no one was injured.

Palestinian police said they were investigating all possibilities and there was no word on who carried out the attack. The Israeli military denied any involvement.

Internal Palestinian rivalries have turned violent in recent months.

Nusseibeh, the peace activist, was released on $1,100 bail after about five hours in custody. He said he had done nothing wrong, and Israeli peace activists complained that police would never have arrested an Israeli employer for illegally hiring Palestinian workers.

Nusseibeh was arrested Wednesday morning after Israeli border police near Al Quds University chased four Palestinian workers who refused to present their work documents.

The men fled to the university's administration building, where Nusseibeh, the university president, told the police he was responsible for them, Jerusalem police spokesman Shmuel Ben-Ruby said.

After he was freed, Nusseibeh told reporters, "They made me spend all this time this morning just to tell them I had no idea about it."

Yossi Sarid of the dovish Yahad party accused the government of singling out Nusseibeh.

"As far as I remember, there is no precedent for arresting the Jewish employer of illegal residents," Sarid told the Haaretz daily.

There are hundreds of thousands of illegal foreign workers in Israel, and thousands of Palestinians are believed to defy military closures and sneak into Israel to work.

Though Israel's government has embarked on a program to expel illegal workers because of high unemployment, those caught employing illegal workers are usually fined, not hauled in by the police.

Nusseibeh has been promoting a peace plan he put together with Ami Ayalon, former chief of Israel's Shin Bet security service. The plan envisions a Palestinian state alongside Israel, and the two have collected tens of thousands of signatures.

"Sari Nusseibeh is a public figure, and before you arrest him, you have to ask yourself twice whether or not it's the right time to arrest him," Ayalon told Israel Radio.

The grassroots plan has gained international prominence, with U.N. Secretary-General Kofi Annan endorsing it and Secretary of State Colin Powell meeting with Nusseibeh and Ayalon last year to provide encouragement.

Sharon's hard-line government has rejected the initiative and a similar proposal, dubbed the Geneva Accords, put together by former Israeli and Palestinian Cabinet ministers and their supporters, charging that they give too much to the Palestinians.

Sharon is promoting his own plan, which calls for evacuating Israeli settlements and military installations in the Gaza Strip, while taking down only four of some 140 settlements in the West Bank.

Sharon says his "unilateral disengagement" plan is necessary because the Palestinian leadership is not a partner for peace talks. He accuses Palestinian leader Yasser Arafat of supporting terrorism.

Sharon spent Wednesday telephoning key Likud activists, trying to persuade them to support the plan.

Critics charge that evacuating settlements is a prize for Palestinian terrorism. Sharon and his Likud have been the backbone of the settlement movement for decades.

Also Wednesday, a Palestinian driving a vehicle disguised as an Israeli army jeep was killed when explosives inside detonated after Israeli soldiers opened fire. Four Israeli soldiers were wounded, two seriously.

The incident took place near the Jewish settlement of Kfar Darom in central Gaza. Hamas claimed responsibility, saying the vehicle was packed with 550 pounds of explosives to avenge Israel's assassinations of Hamas leaders Abdel Aziz Rantisi and Sheik Ahmed Yassin.

Meanwhile, an investigative team at the Justice Ministry is coming to the conclusion that there is not enough evidence to indict Sharon in a bribery case, despite signs of wrongdoing, Israeli Channel Two TV reported, without citing any sources.

But another television station reported that the team was undecided about the indictment, and ministry officials could not immediately reached for comment.

Police have been investigating Sharon on suspicion he accepted $690,000 in bribes from Israeli businessman David Appel to help promote a tourism project in Greece and rezone urban land in Tel Aviv.

The final decision on whether to charge Sharon rests with Attorney General Meni Mazuz and is expected within a month. If Sharon is indicted, he could be forced to step down.