Israel's parliament gave preliminary approval Wednesday to compensation payments for Jews living in Gaza and four West Bank settlements, clearing a major hurdle in Prime Minister Ariel Sharon's plan to evacuate 25 settlements next year.

By a 64-44 vote with 9 abstentions, the Knesset (search) passed the first of three votes on compensation packages giving hundreds of thousands of dollars to each family of the 8,800 settlers in Gaza and parts of the West Bank.

Sharon's "disengagement plan" has been strongly supported by the United States, Europe and most Israelis, but it has divided Sharon's own Likud Party (search) and weakened his domestic political position.

Following the vote, the compensation bill goes to a committee for fine-tuning, and must pass two more votes before becoming law. The government plans to complete the legislation by Dec. 31.

Sharon's chief rival in the Likud, former Prime Minister Benjamin Netanyahu (search), supported the plan, but its opponents included parliament speaker Reuven Rivlin.

Sharon already has won a series of battles, including last week's parliamentary vote approving the withdrawal in principle. Wednesday's vote was the first time parliament debated the specifics of the plan.

The withdrawal is expected to begin next summer and be completed within three months, despite settlers' vows to resist eviction.

The settlers, a traditional constituency of Sharon, are furious with their former patron. Rabbis have issued rulings accusing him of violating Jewish law, and officials have warned of the threat of violence, civil war and assassinations.

The Yesha settlers' council ran a full-page ad Wednesday in the Maariv daily newspaper criticizing the bill.

"Warning: Dictatorship," it said, "Sharon is tearing apart the nation."

Sharon's plan calls for a full withdrawal from Gaza, where 8,200 Jewish settlers live amid 1.3 million Palestinians, and a pullout from four West Bank settlements. He has said the moves will improve the country's security and help it hold on to large chunks of West Bank settlements.

Sharon has refused to coordinate the pullout with the Palestinians, saying Yasser Arafat's administration is tainted by terrorism. Arafat was evacuated to a French hospital last week for an unidentified ailment, raising speculation he may not return to power.

Sharon has said he will continue with his plan regardless of Arafat's condition, but he held out the possibility of resuming peace talks if a moderate Palestinian leadership emerges.

The Palestinians, who have criticized Sharon's plan as an elaborate Israeli land grab, say Arafat remains in control.

The proposal represents a dramatic turnaround for Sharon, who for decades was the prime mover in building and expanding Jewish settlements. His hardline constituency, which supported Jewish footholds in the Palestinian territories out of political, security and religious beliefs, has been unable to accept his sudden shift.

To get his plan through a rebellious Cabinet in June, Sharon dismissed a pro-settler party and its two ministers. Another minister quit after the vote. Their departures deprived Sharon of his parliamentary majority, and about half the members of the Likud Knesset faction oppose the pullout, leaving Sharon at the mercy of Labor for his continued political survival.

That put the Labor Party, led by 81-year-old Nobel peace laureate Shimon Peres (search), in an awkward position. Labor voted for the compensation bill but opposed the Sharon government's domestic policies and did not want to be regarded as an automatic safety net for its longtime political enemy.

Since Sharon announced the plan, Gaza has experienced a surge in violence, as rival Palestinian militant groups compete for power and step up attacks on Israel in an attempted show of strength. Israel has responded with harsh reprisals, intent on showing it is not fleeing the volatile area.

In fresh violence Wednesday, Israeli troops shot and killed a Palestinian man in Rafah refugee camp in southern Gaza, hospital officials said. Witnesses said the man was driving his car along the border with Egypt. The army was investigating the report.

Troops and armored bulldozers were clearing land on the outskirts of the camp and firing machine guns sporadically, witnesses said. Six other Palestinians were lightly wounded. Palestinian security sources said eight homes were demolished.

The destroyed buildings included the 50-year-old Zenoureen mosque, said Mohammed Lafi, director of the local Islamic trust.

The military said troops, searching tunnels used to smuggle weapons, were attacked with gunfire, anti-tank missiles and other explosives. It said troops demolished several partial structures but denied damaging a mosque.

Also in Gaza, two Israeli soldiers were injured — including one critically — when they came under fire as they patrolled the Rafiah Yam Jewish settlement, the army said.

Palestinian militants fired a mortar shell at the Neve Dekelim settlement, injuring three soldiers, military officials said on condition of anonymity. The conditions of the soldiers were not immediately known, they said.