GAZA CITY, Gaza Strip (AP- 17 April, 3:58pm) - With a heavy rocket barrage, Israel seized nearly a square mile of the Gaza Strip on Tuesday, retaking Palestinian-controlled territory for the first time since 1994 in retaliation for a mortar attack on a small Israeli desert town.

An Israeli official, speaking on condition of anonymity, said Israeli troops would leave the pocket in northeastern Gaza overnight. The seizure of the land enraged Palestinians and provoked rare criticism from the United States.

Secretary of State Colin Powell called the action in Gaza ``excessive and disproportionate'' and said Israel should respect its commitment to the Palestinians. ``The situation is threatening to escalate further, posing the risk of a broader conflict,'' Powell said.

Israel had initially said it could hold the territory - an area of orange groves and farmland - for months until Palestinian mortar fire stopped. Palestinian leader Yasser Arafat denounced the seizure as an ``unforgivable crime'' and said his people would ``not kneel before gangs.''

Palestinian security officials, also speaking on condition of anonymity, said U.S. officials told them the Israelis would withdraw from the area seized in Gaza.

The Israeli assault came in response to mortar fire Monday night on Sderot, a working class town of 24,000 about 2 1/2 miles east of Gaza. The town is a stronghold of support for Israeli Prime Minister Ariel Sharon, and his sheep ranch is five miles away. The Islamic militant group Hamas claimed responsibility for the mortars, but Israel blamed Palestinian security forces.

Flares lit up the sky Monday night as Israeli forces shelled and rocketed Palestinian police stations across the Gaza Strip, killing a policeman and injuring 36 other people. Soon after, troops crossed into the corner of Gaza closest to Sderot, seizing and tearing down abandoned Palestinian security posts. Under Israeli tank fire, army bulldozers razed orange groves outside the Palestinian town of Beit Hanoun, and Israeli troops built fortified positions.

During the barrage, hundreds of Palestinians, including crying children, ran into the streets in Gaza City's Rimal neighborhood, where rockets punched holes in the facade of a police headquarters. Rimal resident Ghada Skaik, whose bedroom window was shattered, said she spent a sleepless night. ``If you go to bed and you can't feel safe, then where can you go and feel safe?'' she said.

By daybreak, after Israeli troops settled into their new positions, tanks periodically fired toward Palestinians trying to approach the area. Palestinian medics carrying the body of a Palestinian policeman away from the rubble of a Beit Hanoun police compound were sent running by Israeli fire, at one point dropping to the ground to take cover.

Two Palestinian boys were killed by Israeli gunfire late Tuesday. In Gaza's Rafat refugee camp, Bara el-Shael, 10, was shot by soldiers, relatives and doctors said. In el-Khader, near Bethlehem in the West Bank, Rami Musa, 16, was killed when an Israeli tank shelled his home, Palestinians said. The Israeli military said there was an exchange of fire at el-Khader.

Since the violence erupted on Sept. 28, 475 people have been killed, including 391 Palestinians, 64 Israeli Jews and 19 others.

Israeli tanks also cut the Gaza Strip into three parts, preventing north-south traffic and paralyzing life in the crowded territory of 1 million Palestinians. The crossing from Gaza into Egypt was sealed.

Stranded Palestinian commuters resorted to the Mediterranean beach - the only remaining passage. Young women in long robes and white headscarves, some carrying schoolbooks, walked along the beach, and donkey carts and tractors ferried passengers.

The Israeli commander of the region, Brig. Gen. Yair Naveh, said that the seizure of the territory - about a square mile - removed Sderot from the danger of mortars.

Israeli troops withdrew from two-thirds of the 140-square-mile Gaza Strip in 1994, as part of interim peace accords with the Palestinians.

Since the outbreak of Israeli-Palestinian fighting in September, Israeli troops have entered Palestinian-controlled territory from time to time, but each time withdrew quickly. Tuesday marked the first time Israel retook land.

Palestinians had fired dozens of mortars at Israeli targets in recent weeks, mainly Jewish settlements in Gaza. The attack on Sderot caused no damage or injuries, but was the first on a town inside Israel proper.

``This is unjustified and crosses the line,'' Foreign Minister Shimon Peres told Israel radio. ``There's a limit to everything.''

Arafat said the Palestinians would fight until they obtained statehood. ``Everyone must understand that our strong people will not kneel in front of the gangs that are attacking our masses and our citizens and our villages and our refugee camps and cities,'' he said after returning from a meeting in Egypt with President Hosni Mubarak.

Mubarak, who has tried to mediate an end to the fighting, said peace efforts were now dead. ``I don't see any possibility of success this way,'' Mubarak said, blaming Sharon for the flareup.

The land was seized at a time of renewed tensions on Israel's border with Lebanon. Lebanese Hezbollah guerrillas killed an Israeli soldier in a weekend rocket attack, followed by an Israeli airstrike against Syrian targets in Lebanon, a first since the 1980s.

Israeli legislator Dan Meridor, chairman of parliament's Defense and Foreign Affairs Committee, said he had information that some of the Palestinian mortar attacks had been coordinated with Lebanese guerrillas.

WASHINGTON (Reuters - April 17, 2:26pm) - The United States on Tuesday called on Israel to withdraw immediately from Palestinian-run parts of Gaza and on the Palestinian Authority to prevent and punish attacks on Israelis.

In his first statement on the last four days of Middle East violence, Secretary of State Colin Powell said the United States was "deeply concerned" that the fighting could escalate and lead to a broader conflict in the region.

Israeli forces moved up to a half mile into the Gaza Strip on Tuesday and a top Israeli general said his troops could stay in their new positions for months.

Powell blamed the Palestinians for provoking the violence in the Gaza area with a mortar attack on Israel on Monday but said the Israeli response, which included attacks from the air and the sea, was "excessive and disproportionate."

"We call upon both sides to respect the agreements they've signed. For the Palestinians, this includes implementing their commitment to renounce terrorism and violence, to exercise control over all elements of the PLO and the Palestinian Authority, and to discipline violators," Powell said.

"For the Israelis, this includes respecting their commitment to withdraw from Gaza according to the terms of the agreements signed by Israel and the Palestinians. There can be no military solution to this conflict," he added.

State Department spokesman Richard Boucher, asked how quickly the Israelis should pull back, said: "I've outlined today for you a series of steps that the different parties should be taking and, we think, should take immediately."

"The Israelis should get out now. They made an agreement to withdraw and they should not reoccupy," added a senior State Department official, who asked not to be named.

Powell offered U.S. assistance to help Israel and the Palestinians resume security cooperation talks but Boucher said U.S. diplomats had not proposed any specific meetings.

The U.S. statement, like remarks on the Lebanese guerrilla group Hizbollah on Monday, firmly laid blame on the Arab side for provoking the Israelis into retaliation.

Hizbollah attacked an Israeli tank in a disputed area near the borders of Lebanon, Syria and Israel on Saturday. Israel responded on Monday by destroying a Syrian radar position east of Beirut, on the grounds that Syria can restrain Hizbollah.

Powell said: "The hostilities ... in Gaza were precipitated by the provocative Palestinian mortar attacks on Israel. The Israeli response was excessive and disproportionate."

"We continue to strongly believe that the resumption of bilateral security cooperation is essential to reduce and eventually end the violence. We are continuing to work with the parties so that they can resume as soon as possible the security discussions they began two weeks ago," he added.

The U.S. Central Intelligence Agency helped organize one session of security cooperation talks between Israelis and Palestinians early this month but the meeting did little to reduce the tensions between the two sides.

Analysts say the Palestinians have little interest in security cooperation talks when the right-wing government of Israeli Prime Minister Ariel Sharon refuses to resume negotiations on a permanent settlement.

The new administration of President Bush, in office for almost three months, has been reluctant to take up the active role the previous Clinton administration played in Middle East peace talks.

Powell said, "The United States remains prepared to assist the parties in taking steps to reduce the violence, seeking ways to restore trust and confidence, and assisting them in resolving their differences through negotiations."

The main detailed peace proposals now under discussions are those prepared by Egypt and Jordan and put to Israel by Jordanian Foreign Minister Abdulilah al-Khatib on Monday.

Boucher said the United States welcomed the "constructive role" played by Egypt and Jordan, the only two Arab states with peace treaties with Israel, but he declined to comment on the details of their peace plan.

"They have been tireless advocates for peace in the region. We welcome their ongoing efforts to help the parties halt the violence, restore trust and confidence in creating environments for peace," the spokesman said.

Assistant Secretary of State Edward Walker, the top U.S. diplomat on the Middle East, left for the region on Monday but his itinerary at this stage remains Jordan, Syria and Turkey. His mission is to discuss sanctions against Iraq.

WASHINGTON (AP, 17 April, 3:37pm) - In a rare thrust at Israel, Secretary of State Colin Powell on Tuesday accused Israel of an ``excessive and disproportionate'' response to Palestinian mortar attacks and said it should respect its commitment to withdraw in Gaza.

Powell's statement, read by State Department spokesman Richard Boucher, also called on Palestinian leaders to fulfill their promise to renounce terrorism and violence and to exercise control over all elements of the Palestinian Authority and the Palestine Liberation Organization.

A few hours later, a senior Israeli official said Israel would pull its forces out of the patch of Gaza overnight.

Initially, Israel had said it would hold the territory until danger passed, while an Israeli military commander said his forces might remain for months.

At the White House, spokesman Ari Fleischer echoed Powell's statement, saying President Bush was calling on all sides to exercise restraint.

Fleischer went on: ``We call on both sides to respect the agreements they've signed.''

Powell also blamed the Palestinians for starting the latest outbreak, much as the State Department on Monday blamed Hezbollah guerrillas in Lebanon for triggering an Israeli attack on Syrian-run radar installations in Lebanon.

But Powell's assertion that Israel was not upholding its commitment under the Oslo accords with the Palestinians gave his statement special meaning. ``The situation is threatening to escalate further, posing the risk of a broader conflict,'' Powell said of the expanded violence.

His criticism of Israel was in response to seizure by Israeli troops of a Palestinian-controlled area in Gaza as well as rocketing of Palestinian security bases in retaliation for mortar fire Monday on an Israeli town.

``The hostilities last night in Gaza were precipitated by the provocative Palestinian mortar attack on Israel,'' Powell said in the statement. ``The Israeli response was excessive and disproportionate.''

Clearly with Israel in mind, Powell also said: ``There can be no military solution to this conflict.''

He said the United States was working with the parties toward a resumption of Israeli-Palestinian security talks, which Powell said are essential to reduce and eventually end the violence.

``We call upon all sides to exercise maximum restraint, to reduce tensions and to take steps to end the violence immediately,'' Powell said.

Boucher said U.S. diplomats in Israel, Syria and Lebanon have met ``at very high levels to encourage maximum restraint and to encourage the parties to restrain from further actions that could exacerbate the situation.''

Beyond that, Boucher said, ``First and foremost, both parties and the people, both the Palestinian Authority and Israel, the people, the Israelis and Palestinians who live there, have an enormous and a very significant interest in security and in peace.''