Parts of the occupied West Bank must be given up and a new border quickly established, Interim Israeli Prime Minister Ehud Olmert said in his first policy speech since succeeding Ariel Sharon as head of govenrment.
"In order to ensure the existence of a Jewish national home, we will not be able to continue ruling over the territories in which the majority of the Palestinian population lives," he said today.
Mr Olmert's comments were in line with what Mr Sharon had said before he was incapacitated by a stroke on January 4th.
Hinting that Israel would act alone to set a border if talks failed, Mr Olmert said he hoped tomorrow's Palestinian election would deliver a government ready to follow the internationally-backed road map for peace.
"The most dramatic and important step we face is shaping the permanent borders of the state of Israel.
"We would prefer an agreement. If our expected partners in the negotiations in the framework of the road map do not uphold their commitments, we will preserve the Israeli interest at all costs," Mr Olmert said.
Palestinians reacted warily to the suggestion of Israel acting unilaterally while Jewish ultranationalists were furious at the prospect of giving up land they see as a biblical birthright.
As the acting leader of the centrist Kadima party that Mr Sharon founded weeks before his stroke, Mr Olmert is expected to win a March 28th general election, defeating leftist Labour and Mr Sharon's former party, the right-wing Likud.
The Palestinian Authority is fully committed to peacemaking, its lead negotiator Saeb Erekat said but warned: "Mr Olmert must abandon the ways of unilateralism".
Palestinians vote tomorrow in their first parliamentary ballot for 10 years, which could for the first time usher into government the powerful Hamas Islamic movement, whose charter calls for Israel's destruction.
Most opinion polls show Hamas trailing Fatah, but the margin has narrowed to a few percentage points.
Israeli officials have cautioned that a victory for Hamas could herald an end to Middle East peacemaking.