Updated

U.S. Sen. George Mitchell called on Palestinians to jail terrorists and on Israel to freeze all settlement activity, saying each side must act quickly to pull the region back from the abyss.

"Fear, hate, anger and frustration has risen on both sides," Mitchell said. "The greatest danger of all is that the culture of peace, nurtured over the previous decade, is being shattered. In its place there is a growing sense of futility and despair, and a growing resort to violence."

The commission, established as part of a U.S.-brokered cease-fire in October that did not take hold, recommended a series of steps to be taken by both sides to stop an eight-month cycle of violence and reprisal. "It will keep on getting worse unless the government of Israel and the Palestinian authorities take swift and decisive action," he said.

The United States is trying to put together a package deal for renewing peace talks that would include some of the Mitchell Commission recommendations, said a senior Palestinian official speaking on condition of anonymity.

The report has heightened expectations in the Middle East that Washington will be more aggressive. The increasing clashes are seen as testing President Bush's reluctance to get directly involved in Israeli-Palestinian peacemaking.

The report determined that a Sept. 28 visit to Jerusalem's Temple Mount by Ariel Sharon, now Israel's prime minister, "did not cause" the current violence. But the report does say the visit was poorly timed and the provocative effect should have been foreseen. The Palestinians have said the unannounced visit to the Muslim holy site triggered the violence; the Israelis have accused the Palestinians of using the visit as an excuse to riot.

A key sticking point to peace is Israeli activity in Jewish settlements in the West Bank and Gaza Strip. The Mitchell Commission, as well as an Egyptian-Jordanian peace plan presented earlier this year, call for a construction freeze. Israel has said it has to accommodate natural population growth in the settlements, home to 200,000 Israelis, and cannot stop building.

The report calls on the Israeli army to use non-lethal responses to unarmed demonstrators. The Palestinians should prevent gunmen from using Palestinian areas to fire on Israeli positions.

The report also called on the Palestinians to do more to fight terrorism.

"The Palestinian authorities should make clear through concrete action ... that terrorism is reprehensible and unacceptable and that the Palestinian authorities will make a 100 percent effort to prevent terrorist operations and to punish perpetrators. This effort should include immediate steps to apprehend and incarcerate terrorists."

The report did not assign blame to either side.

"We are not a tribunal. We complied with the request that we not determine the guilt or innocence of individuals or of the parties," the commission said. The report includes a seven page response from the Israelis and a ten page Palestinian response.

In addition to Mitchell, the commission includes former Turkish President Suleyman Demirel, European Union Foreign Policy Representative Javier Solana, former Sen. Warren B. Rudman of New Hampshire and Norwegian Foreign Minister Thorbjoern Jagland.

The panel itself was the result of a compromise between the sides -- the Palestinians had wanted an international-led commission while Israel wanted the United States to play the lead role. Mitchell and others on the panel visited the region and spent several months investigating the violence.

The commission's findings were given out earlier this month by the Bush administration to U.N. Secretary-General Kofi Annan, Israel and the Palestinians.

The Palestinians accepted the findings and have called on the Bush administration to embrace the report -- as Annan has -- as a basis for resuming peace negotiations.

Israel has said it accepts the report but disagrees with the call for a halt to construction in their settlements in the West Bank and Gaza -- areas the Palestinians hope will become part of their future state.

Mitchell called on each side to choose the path of peace.

"Two proud peoples share a land and a destiny. Their competing claims and religious differences have led to a grinding, demoralizing, dehumanizing conflict," he said. "They can continue in conflict, or they can negotiate to find a way to live side by side in peace."