Updated

Israeli and Palestinian Cabinet members met Monday to discuss a plan for the Palestinian prime minister to lobby Israel's parliament for a large-scale prisoner release to try to resolve a growing crisis over the prisoners held by Israel.

Earlier, 2,000 Palestinians marched in the West Bank (search) to protest Israeli plans to release only a small fraction of the thousands of Palestinian prisoners it holds.

Meanwhile, a blast leveled a house in Kfar Yavetz, an Israeli village near the West Bank, killing the 65-year-old woman who lived there and an unidentified man. Police said it was apparently a homicide bombing. It would be the first such attack since Palestinian militants declared a cease-fire on June 29. There was no immediate claim of responsibility.

In another obstacle to the week-old cease-fire, an Israeli security official warned Monday that Israel might have to take action if Palestinian police don't stop militants from exploiting the truce to recruit new activists, re-establish a command structure and rearm.

Israel's Cabinet approved guidelines Sunday for freeing several hundred prisoners, but said members of radical groups like Hamas (search) and Islamic Jihad (search) and anyone involved in attacks on Israelis would not be freed. Israel holds some 7,000 Palestinian prisoners, according to the International Committee of the Red Cross (search), and the new measures call for the release of only about 400.

The Cabinet said the move was aimed at strengthening the position of Palestinian Prime Minister Mahmoud Abbas and his allies who support the cease-fire. But Palestinian officials said the release must be expanded.

"This is the first time in the history of the Palestinian movement that all the Palestinian factions have agreed on a cease-fire," Hisham Abdal Raziq, the Palestinian minister of prisoner affairs, said at a meeting with the Israeli justice minister, one of numerous such visits in recent days after a freeze of several years.

"This has to be understood and strengthened. How can it be strengthened if you say that you won't release people from Hamas and Islamic Jihad?"

Israeli Justice Minister Yosef Lapid said the Palestinians "also have obligations to fulfill, and not just to make demands from us. We will only release prisoners who will commit to keeping peace with us."

At the meeting, Abdal Raziq, Palestinian Justice Minister Abdul Karim Abu Salah and Lapid discussed a proposal that Abbas meet with Lapid's Shinui faction in Israel's parliament to discuss the prisoner release. Shinui is the most moderate group within the coalition government.

Palestinian Information Minister Nabil Amr -- who met with Israeli Foreign Minister Silvan Shalom Monday -- said the Palestinians proposed that Abbas and security chief Mohammed Dahlan meet with Israeli Knesset members "to discuss the issue of the Palestinian prisoners and the importance of going ahead with the road map."

He said Abbas and Yasser Arafat both support the idea.

Although Amr said the venue had not been set, momentum appeared to be building toward a Knesset visit by Abbas and Dahlan.

Knesset spokesman Giora Pordes said Lapid asked Knesset speaker Reuven Rivlin for permission for Abbas and Dahlan to visit. Rivlin approved the visit, but Pordes said no date has been set.

Israeli media were widely reporting Monday night that Abbas would visit the Knesset in coming days.

Also Monday, an Israeli-Palestinian committee met for the first time to discuss what Israel considers Palestinian incitement in the media.

"On Palestinian television you see every day pictures of the burning of Israeli flags (and) the map of greater Palestine ... with no mention of Israel," Israeli Foreign Minister Silvan Shalom said at the meeting.

"I am pleased that in recent days ... we've seen a measure of positive change in the degree of anti-Israeli incitement and hatred."

In footage rebroadcast on Israel TV, Palestinian TV director Othman Abu Remeileh went on the air to endorse the peace plan. "The Israelis are indeed withdrawing and are starting to act with sanity," he told viewers. "We are at the beginning of a new era ... an era of peace."

The truce began on June 30, with Hamas and Islamic Jihad promising to halt attacks against Israel for three months and a militia associated with Arafat's Fatah vowing to halt attacks for six months.

Israel responded by pulling out of parts of Gaza and the West Bank town of Bethlehem, and has promised further withdrawals.

A senior Israeli security source, however, accused Hamas and Islamic Jihad of exploiting the cease-fire to rebuild an infrastructure largely destroyed in almost three years of fighting.

The source, who spoke on condition of anonymity, also said Palestinians have been smuggling in weapons and stepping up construction of rockets they can fire at Israeli settlements and towns.

Abbas and Dahlan said they will persuade the militants to lay down their arms but will not use force, for fear of igniting a civil war.

More than 2,400 Palestinians and 800 Israelis were killed in the fighting that broke out in September 2000 and buried the last Mideast peace effort.