Israel has freed 500 Palestinian prisoners following a cabinet decision to evacuate a number of Jewish settlements from Palestinian land.
The cabinet also agreed to unilaterally seize another 6 per cent of Palestinian land to facilitate a rerouting of the West Bank separation barrier.
The move comes a day after the Israeli government gave its final approval to a withdrawal from Gaza.
With the historic cabinet vote, Israel began charting its final borders, bypassing negotiations and angering the Palestinians.
Prime Minister Ariel Sharon said the decision to leave Gaza and four settlements in the northern West Bank was the hardest he ever made but would ensure a better future for Israel.
Mr Sharon signed an order saying Israeli civilians would have to leave the areas slated for evacuation by July 20th. Those remaining would be removed by force over a period of two months. Settler leaders have pledged not to leave voluntarily, and security officials are bracing for violent confrontations.
In the West Bank, Palestinian leader Mahmoud Abbas won the backing of his Fatah movement for a new 24-member Cabinet after a stormy debate, clearing the way for approval of the new ministers by parliament later Monday.
The release of Palestinian prisoners was one of the gestures Mr Sharon agreed to at his summit with Mr Abbas earlier this month in Egypt. Convoys of buses carrying shackled inmates left Israel's desert prison camp of Ketziot around dawn today. Those freed had not been involved in attacks on Israelis
Israel has promised to release 400 more prisoners within the next three months. A joint Israeli-Palestinian ministerial committee will decide which prisoners will be released in the second round.
Israel is resisting Palestinian demands to free those serving long terms, including for attacks on Israelis.