The plan to be presented to the cabinet includes the reversal of the government decision to freeze the transfer of Palestinian tax revenues, which was instituted after Hamas came to power early last year.

The tax funds collected by Israel since the freeze are believed to amount to between $300 million and $400m. An official said the money would be transferred in stages after coordination with the Palestinians.

The cabinet will also discuss policy toward the new Palestinian government and ways Israel can strengthen Abbas following the Hamas takeover of the Gaza Strip two weeks ago.

Strategic Affairs Minister Avigdor Lieberman.
Photo: Ariel Jerozolimski

Among the measures likely to be approved are removing more West Bank roadblocks and pressing ahead with peace talks if the Fayad government shows it is acting to prevent terrorist attacks.

A diplomatic official in Jerusalem stressed that there would be neither an additional transfer of weapons to the Palestinians nor a release of Palestinian security prisoners at this juncture. The source stressed that although Jerusalem viewed the new Palestinian administration very positively it was still very early and the Fayad government still had to prove itself.

Strategic Affairs Minister Avigdor Lieberman is expected to be among the minority of ministers to vote against measures to boost Abbas.

Speaking over the weekend, Lieberman said: "Even if we give Abbas F-16s he still has no chance to succeed against Hamas. It has already been proven that giving weapons and money to Fatah goes toward strengthening terror and not toward fighting it."

The Sharm e-Sheikh summit will be the first opportunity for Olmert to meet with moderate Arab leaders since the dramatic developments in Gaza.

An official in Jerusalem confirmed that the prime minister would press Mubarak to step up efforts to thwart the smuggling of weapons from Sinai into the Gaza Strip.

On Saturday an official in Jerusalem told Israel Radio that Egypt could do more to prevent the smuggling on its border with Israel if it wished to do so. Egypt and Jordan must prevent terror operatives from becoming more confident for they endanger stability not only in Israel, but in their countries as well, he added.

Furthermore, Israel must make it clear that violence would not advance anything and that Abbas would be guaranteed cooperation by the international community to combat violence in the PA-controlled territories, the official said.

Mubarak on Saturday described the Hamas takeover of Gaza as a "coup" and warned that the group's conflict with Fatah could lead to the creation of two Palestinian entities.

In his first remarks since Hamas wrested control over the Mediterranean strip, Mubarak reassured Abbas of Egypt's support. "We have been following closely the repercussions of the coup over Palestinian legitimacy in Gaza and its grave setbacks on the Palestinian people," Mubarak said.

"We feel sad for the shedding of the blood of Palestinians by Palestinian hands, in a fighting that has crossed all red lines ... leading up to division of its occupied territories," Mubarak added, referring to the Hamas-controlled Gaza and Fatah's West Bank.

Abbas arrived in Amman on Saturday for talks with Jordanian officials ahead of Monday's summit. He is scheduled to hold talks with Abdullah on Sunday.

A low-level meeting of the Quartet - the US, the European Union, the United Nations and Russia - will take place in Jerusalem on Tuesday, a day after the Sharm e-Sheikh summit.

A higher level meeting of the Quartet was to have taken place on Monday in Egypt. However that session was delayed due to the Hamas takeover of Gaza.

The Quartet representatives will be assessing the latest developments in the region and how the body can advance the peace process in light of the changes that have taken place.

AP contributed to this report.•