Israel is considering building thousands more homes in West Bank settlements, in line with Prime Minister Ariel Sharon's plan to keep large chunks of the territory but give up the Gaza Strip, security officials said Tuesday.

In a possible boost for Sharon's Gaza withdrawal plan, Israel's attorney general was expected to announce later Tuesday that he is closing a corruption investigation against the prime minister, officials close to the case said.

The opposition Labor Party, which supports a Gaza pullback, has said it would only consider joining Sharon's coalition if he is cleared of corruption suspicions.

Sharon needs Labor to restore his parliamentary majority. Several coalition hardliners defected over the Gaza plan, leaving him with a minority government.

In the meantime, Labor has prevented Sharon's government from being toppled, by abstaining in no confidence votes in parliament.

However, Labor leader Shimon Peres (search) warned that his party should not be taken for granted.

"We're not in anyone's pocket," Peres told Israel Army Radio.

Media reports said a decision to join the coalition could split Labor, and that only about 15 of the party's 19 legislators would follow Peres into the government.

Sharon's plan of "unilateral disengagement" calls for a withdrawal from all of Gaza and four West Bank settlements by September 2005. Sharon has said that in exchange, he wants to keep and expand several large settlement blocs in the West Bank — a demand that has won the tacit support of President Bush.

The Israeli daily Maariv reported Tuesday that Defense Minister Shaul Mofaz (search) has asked the military to draw up plans within three months for building thousands of homes in three of the settlement blocs — Gush Etzion, Maale Adumim and Ariel.

The Defense Ministry declined comment.

However, security officials, speaking on condition of anonymity, said Mofaz met Monday with settler leaders in Gush Etzion (search), and told them he would consider their request to build thousands more homes there.

Maariv said additional construction is also expected in Maale Adumim and Ariel, the two largest West Bank settlements.

The newspaper said Mofaz told the head of the so-called Civil Administration, the Israeli military government in the West Bank, to accelerate authorization for a number of construction projects in Gush Etzion.

Shaul Goldstein, the deputy head of the Yesha Council, the settlers' umbrella group, said he spoke to Mofaz about the need to update building plans for settlements.

However, Goldstein denied a Maariv report that he asked for approval of 5,300 new homes for Gush Etzion. He told The Associated Press no specifics were discussed at the meeting.

Sharon has said he plans to expand settlement blocs Israel intends to keep under a future peace deal.

The Palestinians want all of the West Bank, Gaza and east Jerusalem, territories Israel captured in the 1967 Mideast War, for their future state. They have been deeply suspicious of the Gaza plan because of the implied tradeoff — Israel giving up Gaza to strengthen its hold on parts of the West Bank.

It was not clear whether Gaza settlers would be moved to the West Bank. Sharon has considered such an option, but it was vetoed by the Bush administration.

"We call on the American administration for direct and immediate intervention to revoke and stop all these plans," said Palestinian Cabinet minister Saeb Erekat.

In new violence Tuesday, a Palestinian vehicle apparently rigged with explosives blew up in the Gaza Strip after Israeli soldiers fired on it. No one was hurt, the army and Palestinian witnesses said.

On Monday evening, two Palestinian militants were killed in an Israeli airstrike in the Balata refugee camp, on the outskirts of the West Bank city of Nablus.

The targeted attack killed Khalil Marshoud, local leader of the Al Aqsa Martyrs' Brigades, a violent offshoot of Yasser Arafat's Fatah movement. The military said Marshoud was behind a number of attacks against Israelis.

Another Palestinian militant was killed and a third person was seriously wounded, witnesses said.

Israel killed two other Al Aqsa leaders in a missile attack in Nablus on May 2.

In Bethlehem, the army demolished the family home of a fugitive activist of the Islamic Jihad movement, the military and the man's relatives said.