The United States, Israel and Egypt are pushing to hold a Mideast peace conference in October to coordinate an Israeli withdrawal from the Gaza Strip (search) and advance an internationally backed peace plan, officials said Thursday.

The officials said the conference was at the early planning stages and there were obstacles to overcome — including Yasser Arafat's (search) refusal to reform his security forces and corruption-plagued government — before the details can be finalized.

Arafat is in one of his most tenuous political positions since establishing his Palestinian Authority in 1994. His prime minister, Ahmed Qureia (search), submitted his resignation Saturday following a wave of kidnappings and mass protests.

Arafat refused to accept the resignation, but Qureia insists he is heading a caretaker government. The Palestinian parliament passed a resolution Wednesday demanding the veteran leader form a new government equipped with powers to provide law and order. Parliament reconvened Thursday to discuss further pressure tactics.

A Palestinian lawmaker said after the meeting that Arafat has agreed to grant his prime minister full authority over the security forces.

"Arafat expressed his readiness to give (the prime minister) full authority to reshuffle his Cabinet in the way that he sees fit and give the government full ... authority over the internal security services," Imad Fallouji, a member of the Palestinian Legislative Council, said.

Arafat has made similar promises in the past but failed to live up to them.

The revelation came as the legislative council backed away from a strike threat but at the same time demanded more power from Arafat.

The parliament formed a committee of 14 lawmakers that is to present Arafat with a list of demands including allowing the council to participate in the reform of the corruption-ridden security services — a key U.S. and Israeli demand to move the stalled Mideast peace forward.

In addition, Prime Minister Ariel Sharon is trying to cobble together a coalition government that will back his plan to pullout of the Gaza Strip and four West Bank settlements by October of next year. Labor Party leader Shimon Peres said Sharon's advisers hinted at talks Wednesday that if the left-center party joins the government the pullout could be implemented more quickly.

Moshe Debi, an adviser to Israeli Foreign Minister Silvan Shalom, said the sides want to hold the four-way Mideast peace conference — which would include Palestinian officials — in New York at the level of foreign ministers.

But an Egyptian official, who spoke on condition of anonymity, said his country preferred to hold the conference in Cairo at the presidential level.

A senior U.S. official, who also asked not to be named, said Washington supports the initiative, which was first proposed by Egypt earlier this month.

The conference would focus on planning between Israel, Egypt, the United States and the Palestinians for "the day after" an Israeli pullout from Gaza, the U.S. official said.

Palestinian Cabinet minister Saeb Erekat confirmed the Palestinians had been approached about the idea. He said the conference would also focus on implementation of the so-called road map to peace.

"We welcomed it and we said that we would participate," he told The Associated Press.

Egypt and the United States have been heavily involved in planning and coordinating the planned Gaza pullout. Sharon refuses to directly negotiate the withdrawal with the Palestinians.

Egypt has pledged to train Palestinian security forces ahead of the pullout to ensure a smooth handover, but has demanded Arafat streamline his security forces from 12 to three branches.

Arafat reshuffled the security forces earlier this week following kidnappings and violent protests in the Gaza Strip. But his appointment of an unpopular cousin, Moussa Arafat, to head the forces led to further demonstrations and opposition within his own Fatah movement.

In an attempt to quell the unrest, Arafat again made changes. However, violence spread to the West Bank when gunmen shot an outspoken Arafat critic, former Cabinet minister Nabil Amr, seriously wounding him in the leg.

The shooting infuriated Palestinian lawmakers and ministers, leading to Wednesday's parliament vote.

The United States, meanwhile, has made reforms a condition for Palestinian participation in the Mideast peace conference, an Israeli official, who spoke on condition of anonymity, said.

Israeli officials also said it could be difficult for President Bush to become deeply involved in the Middle East a month before the U.S. presidential elections. However, the officials said, if Bush believes it could serve his electoral interests, he might agree to attend a conference on the presidential level.

Meanwhile, a crisis between Israel and the European Union was brewing. Israel is furious at Europe for backing a U.N. resolution calling for Israel to tear down its West Bank barrier.

EU foreign policy chief Javier Solana said Israel's West Bank separation barrier violates international law.

"A country has the right to build a fence on its own territory but we believe the route of this fence is contrary to international law," Solana said during the joint news conference with Foreign Minister Silvan Shalom.

"The EU should be engaged in promoting Palestinian reform in Gaza and Ramallah, not Palestinian manipulation in the U.N.," Shalom said, adding that Europe's vote "encourages the Palestinians to continue their evasion of responsibility" on fighting terror.