HIGHLIGHTS: At Least one of the Israeli Occupation Soldiers Was Severely Injured|*|Arafat Gets Approval of New Cabinet|*|Sharon Faces Collapse of Ruling Coalition|*|Israeli Official Says Sharon May Order Early Elections within 90 Days|*|Sharon Says American Peace Plan 'Not Acceptable' in its Present Form|*|
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STORY: A Palestinian attacker managed to infiltrate the internationally illegal Israeli settlement "Hermesh", near the Palestinian city Jenin, and opened fire on Jewish settlers there.

Reports in the Israeli media say that the attacker entered the internationally illegal Israeli settlement around 10:30 PM local time, and immediately shot an Israeli couple in their home. He then proceeded down a street in the settlement where he shot and killed two girls.

Israeli occupation soldiers rushed to the scene of the shootings, and the Palestinian attacker then fought a gun battle with them. At least one of the Israeli occupation troops was severely injured. The attacker was then shot by the Israelis and killed. Israeli occupation troops reported that in addition to his rifle, the attacker was also wearing an explosives belt of the type used in previous resistance bombings.

Israeli occupation forces combed the surrounding hills looking for more attackers for several hours after the incident.

ARAFAT GETS APPROVAL OF NEW CABINET

Meanwhile, Yasser Arafat won a tough political battle Tuesday as the Palestinian parliament approved his new 19-member Cabinet despite dissenters demanding more sweeping reforms and limits on the authority of the Palestinian leader.

After a day of heated discussions in the Palestinian parliament, legislators voted 56-18 to approve Arafat's new Cabinet, providing him with a rare success. In recent months, he has faced repeated sieges by the Israeli occupation army at his Ramallah compound and increasing criticism by fellow Palestinians.

SHARON FACES POTENTIAL COLLAPSE OF RULING COALITION

Just a few miles away in Jerusalem, Israeli Prime Minister Ariel Sharon was working to head off the potential collapse of his ruling coalition as the moderate Labor Party threatened to pull out.

The moderate Labor party, the largest faction in the government, says it will vote against the 2003 state budget on Wednesday to protest what it views as excessive spending on settlements.

Sharon has said he will force out any party that votes against the budget, and would try to form a narrow coalition of right-wing and religious parties.

But Sharon's coalition chairman, lawmaker Zeev Boim, said "the more realistic scenario is that there will be no choice for the prime minister but ... to seek early elections within 90 days."

SHARON SAYS U.S. PLAN 'NOT ACCEPTABLE' IN PRESENT FORM

Sharon's Cabinet secretary, Gideon Saar, said a new U.S.-backed peace plan is not acceptable in its current form. Israel objects because it is based in part on an Arab proposal calling for an Israeli withdrawal from all occupied lands and affirming the right of return of Palestinian refugees.

Saar's comments marked the first time an Israeli official said outright the proposal was unacceptable without major changes.

PHOTO CAPTION

A wounded Israeli is rushed to hospital in Hadera, Israel following an attack on an internationally illegal Jewish settlement October 29, 2002. A Palestinian resistance man infiltrated the West Bank settlement and wounded six people before being shot dead by Israeli troops. Photo by Gery Avramoviz/Reuters