Israel and the Palestinian Authority are engaged in their most serious effort for months to put an end to the intifada conflict, which has claimed almost 600 Palestinian and over 160 Israeli lives over the past year.
The Palestinian President, Mr Yasser Arafat, yesterday convened foreign diplomats in Gaza to declare that he was widening his unilateral ceasefire, and said he had now ordered his security forces to use "maximum restraint" and refrain from firing even if shot at by Israeli troops.
In an immediate response, the Israeli Prime Minister, Mr Ariel Sharon, ordered the defence establishment to suspend all "initiated operations", including the targeting of those Palestinians alleged to be orchestrating suicide bombings and other attacks.
In comments markedly more conciliatory than any he has made for months, Mr Arafat expressed a renewed commitment to the peace process, recognition of Israel's right to exist within secure borders, and a desire to "work together" with Israel "to break the vicious cycle of violence".
The Israeli Foreign Minister, Mr Shimon Peres, said his initial impression was that the ceasefire was starting to take hold, and that he anticipated holding talks with Mr Arafat in the very near future to implement US-backed proposals aimed at an eventual resumption of substantive peace negotiations.
Nevertheless, there were still several incidents of heavy violence. Two members of the Popular Front for the Liberation of Palestine attacked Israeli troops outside Nablus; one was shot dead, the second was injured.
Israeli troops also shot dead a Palestinian man in Hebron overnight, in clashes which began with Palestinian gunmen firing on Jewish homes in the city. Palestinian sources said the victim was a taxi driver.
The dramatic new effort to find a way out of the intifada is a direct consequence of last Tuesday's terror attacks in the US, which have left both Israel and the Palestinian Authority anxious to be perceived as allies, rather than irritants or even obstacles, to Washington as it puts together an anti-terrorism coalition.
In the new climate, and given the horrifying scale of last week's bombings in New York and Washington, some Palestinian sources say Mr Arafat may now feel he can afford to order a halt to the intifada, even without concrete gains, while not losing face among his own people.
Mr Sharon was adamant, despite clear pressure from the US in a series of phone calls in recent days, that he would not so much as sanction a meeting between Mr Peres and Mr Arafat until the Palestinian President demonstrated a genuine desire to halt the violence.
However, the Israeli Prime Minister was also evidently determined not to incur any American wrath, and so dispatched his son, Omri, along with another top official, to meet Mr Arafat on Monday night and pave the way for yesterday's dramatic Gaza declaration.
Now that Mr Arafat and Mr Sharon are professing themselves determined to halt the daily diet of shootings and bombings, the test will come on the ground.
Mr Arafat has hitherto refrained from confronting intifada leaders such as the West Bank Fatah chief, Mr Marwan Barghouti, who professes loyalty to the Palestinian Authority but preaches an escalation of the intifada.
And until recent days, Mr Arafat had been publicly contemplating formalising an alliance between the Palestinian Authority and Hamas, whose militants he will now have to subdue if the violence is to tail off.
The Arafat declaration and the Israeli decision to suspend offensive operations have been warmly welcomed by the Minister for Foreign Affairs, Mr Cowen, Deaglβn de BrΘad·n reports. "These actions open the possibility of a renewed effort towards the peaceful resolution of the Israeli-Palestinian conflict," he said.
"I encourage leaders on both sides to renew dialogue as soon as possible and to engage seriously and without preconditions in the search for a comprehensive and lasting solution to their dispute," the Minister said. "We must restore the primacy of the concept of compromise. In the Middle East , as in Ireland, compromise is all too often misrepresented as surrender or appeasement."