Israel has said it will resume food and fuel supplies to the Palestinians and that a ceasefire promised by Palestinian President Mr Yasser Arafat was starting to take hold.
Israeli Defence Minister Mr Binyamin Ben-Eliezer said food and fuel supplies would begin flowing from Israel to the West Bank and Gaza today.
Mr Ben-Eliezer decided to lift the ban as a result of "a significant drop in the level of violence in the past few days" - a reduction he called "a step in the right direction".
US President Mr George W Bush said "enough progress has been made on the ceasefire" for CIA chief Mr George Tenet to return to the Middle East today.
Mr Tenet will talk with Israeli and Palestinian security chiefs on cementing the truce pledged by Mr Arafat in the face of threatened Israeli military retaliation for a Tel Aviv suicide bombing that killed 21 on Friday.
Signalling a more active US role in the Middle East, Mr Bush said he hoped Mr Tenet's return to the Middle East would result in an end to violence and "strong security arrangements" leading to "political discussions".
But a stone-throwing attack that seriously injured an Israeli infant in the West Bank yesterday and a TV interview in which Israeli Prime Minister Mr Ariel Sharon called Mr Arafat a "murderer and pathological liar" kept passions high.
The Muslim militant group Hamas, which claimed responsibility for the Tel Aviv nightclub explosion, said it would keep attacking Israelis "everywhere".