Israel's government had its first discussion Sunday of a plan to offer West Bank settlers cash to leave their homes, a largely symbolic step taken as Prime Minister Ehud Olmert's government approaches the premature end of its term.

The plan would pave the way for a large-scale pullback after a peace agreement with the Palestinians. But both sides say such a peace accord, or even a partial agreement, are far from completion.

Israel is pushing for adjustments in the line between the West Bank and Israel, allowing it to keep main settlement blocs where most of the nearly 300,000 Jewish settlers live, offering to trade Israeli land for the blocs. The Palestinians have not accepted the idea.

The politician behind offering compensation to the settlers, Vice Premier Haim Ramon, believes that only about 62,000 would have to move from 72 locations deep in the West Bank that would be turned over to the Palestinians as part of their state.

Ramon said surveys show about 11,000 would initially agree to take the money and leave, and more would follow.

However, bitter confrontations between soldiers and just 8,000 settlers when Israel evacuated the Gaza Strip in 2005, and continuing hardships faced by the settlers, cast a long shadow on the larger-scale evacuation plans for the West Bank.

Also, many of the West Bank settlements that would be removed are home to the most extreme religious and nationalistic elements among the settlers, including many who do not accept the right of the Israeli government to order their removal. Violent clashes are a high probability.

For now, at least, the plan is theoretical because of lack of apparent progress in peace negotiations that were restarted with great fanfare last November, when a target date of January 2009 was set for an agreement.

Over the weekend Palestinian President Mahmoud Abbas told an Israeli newspaper that no agreements have been reached on any of the outstanding issues. Ramon was just as downbeat on Sunday.

"I'm not optimistic that an agreement will be signed by the end of this year, or next year," he said.

But Ramon said he did not think West Bank settlers should have to live in limbo until an agreement was signed.

The average payment under the plan would be $300,000 to every family that leaves the West Bank, with bonuses for moving away from the heavily populated center of the country.

The plan would apply to areas east of the separation barrier Israel is building along the West Bank. Israel initially claimed that the barrier was a security measure that had no political significance, but Ramon said Sunday the barrier marked Israel's future border.

"Everyone dealing with the negotiations knows that everything east of the fence will not be under Israeli sovereignty," he said in a briefing for reporters. "We are fighting to keep everything west of the fence under Israeli sovereignty." Palestinians charge that the route of the barrier is an Israeli land grab in the West Bank, cutting many Palestinians off from their fields and services.

Ramon said he hoped to turn his plan into legislation within weeks and present it to the government.

But Israel's political system is headed for a period of turbulence. On Wednesday, Olmert and Ramon's Kadima Party is set to elect a new leader, after which Olmert — who has been plagued by corruption allegations — says he will step down. If Olmert's replacement cannot put together a new coalition government, Israel will hold elections.

Both of the leading candidates to replace Olmert, Foreign Minister Tzipi Livni and Transportation Minister Shaul Mofaz, have said they oppose Ramon's idea because it compromises negotiations with the Palestinians by giving up too much too early.

Although the Cabinet took no action on the proposal, Olmert said it marked an important step in preparing the nation to withdraw from occupied land. Olmert took a shot at the West Bank settler movement during the Cabinet meeting, ridiculing those who think Israel can hold on to all of the territory in the long run.

"Whoever speaks to the contrary is deceiving the people," Olmert told the meeting, according to his office. Yishai Hollander, spokesman for an umbrella group representing settlers, called the evacuation plan "unrealistic" and said most settlers wouldn't take it seriously.

"There have been other prime ministers who have said the idea of 'Greater Israel' is finished. And the only thing that has finished is their term in office," he said.

Also Sunday, Israel said it would close vital Gaza crossings Monday in response to a rocket attack. A rocket fired from Gaza exploded in the border town of Sderot in violation of a June cease-fire. It caused a fire, but no one was hurt.