Prime Minister Ariel Sharon has approved plans that would seal off northern Israel from the West Bank by extending a security fence to defend against Palestinian attacks, government officials said Thursday.Construction of the fence began in northern Israel earlier this year to try to prevent attacks by Palestinian resistance men spearheading an uprising for independence, and news that work is to press ahead is likely to further anger the Palestinians.

The fence is expected to cut into West Bank territory in some areas, shielding Jewish settlements built on land Israel has occupied since the 1967 Middle East war.

A Defense Ministry official said the new 27-mile barrier would be built in northern Israel from Megiddo Junction and eastward, past the Gilboa mountains, to the town of Beit Shean, where Palestinian resistance men killed six Israelis last week.

"There was a decision in principle to continue the northern section of the fence. Now they must find the budget resources for it. The track (for the fence) has been agreed on," said Raanan Gissin, a spokesman for Sharon.

"Because of the increase in the wave of terror, they must increase the track to this area, especially after the recent infiltrations. There is a breach (in security) there."

The fence has drawn the ire both of right-wing Israelis, who say it is a de facto border shutting out Jewish settlements in the West Bank from the country proper, and Palestinians, who say it is an excuse for Israel to expropriate more of their lands.

Netzah Mashiah, head of the construction project at the Defense Ministry, said the new section would cost about 225 million shekels (48 million dlrs).

The entire 220 million dlrs fence project is expected to cover 350 km (210 miles), roughly along the lines of the West Bank border before Israel captured the territory in 1967. Work on the first 110-km (70-mile) section began in June.

Making clear the fence could in places take over private Palestinian and Israeli-owned property, Mashiah said: "We are trying to build it on state lands to shorten the process but we can't do so in every place."

ISRAELI RAIDS

Israel pressed on with military raids during the night to try to root out resistance men. The occupation army said it arrested 16 people in the West Bank and five in the Gaza Strip .

Tanks rolled into the southern outskirts of Gaza City where occupation troops demolished the home of Bader Hassan, a member of the resistance Islamic group Hamas who Israel said was involved in shooting attacks.

The raids followed a missile strike Wednesday in which Israeli occupation forces killed a master bomb-maker in Gaza City.

At least 1,694 Palestinians and 668 Israelis have been killed since the Palestinian uprising began. Violence has risen in recent weeks, despite calls by the United States for calm in the region as it seeks Arab support for a possible war on Iraq.

Sharon said Wednesday he accepted in principle President Bush's outline for peace and vowed to seek approval for it by his government after a January 28 election his Likud party is expected to win.

Bush's proposal calls for Palestinian reforms leading to the eventual creation of a state. The United States, European Union , United Nations and Russia are calling for statehood by 2005.

Sharon said he would be open to the creation of an "interim" state only after there is "an absolute end to terror" and a new Palestinian leadership to replace President Yasser Arafat .

Such a state would cover areas of the West Bank and Gaza Strip already given over to full or partial Palestinian control, but Israel would hold on to "essential security areas." A definitive Palestinian state would be negotiated later, he said.

Palestinian leaders rejected his terms, saying their state must be based on the borders before Israel occupied the West Bank and Gaza Strip. "Sharon's offer is not serious. It is part of his election campaign," said Arafat aide Nabil Abu Rdainah.

PHOTO CAPTION

A masked Palestinian resistance man holds a handmade rocket launcher in Gaza during the funeral of Mustafa Sabah, who was killed by an Israeli air strike, December 5, 2002. Prime Minister Ariel Sharon has approved plans that would seal off northern Israel from the West Bank by extending a security fence to defend against Palestinian attacks, government officials said. (Oleg Popov/Reuter