"We want the implementation of the United Nations resolutions concerning the establishment of a Palestinian state within the territories that were occupied in 1967. With regards to the issue of the refugees, we want a solution based on United Nations resolution 194."

Abu Rudaineh added that the Palestinians remain committed only to the road map and the Arab peace initiative as the only way to achieve peace in the Middle East. "The only way to achieve peace is by implementing the road map and the Arab peace initiative, and not by coming up with new initiatives," he said. "We need serious negotiations and actions, not only words."

In his speech, Olmert reaffirmed that Israel would be willing to withdraw from a great deal of territory in return for a true peace. He also called on the Palestinians to give up the right of return for the refugees.

Palestinians waving a PA flag.
Photo: AP

"I am extending my hand in peace to our Palestinian neighbors in the hope that it will not be returned empty," he said.

"We, the state of Israel, will agree to withdraw from a large amount of territory, and from the settlements that we established there -something that is very difficult for us, [equivalent to] a parting of the Red Sea - but we will do that in exchange for real peace."

Commenting on the speech, PA negotiator Saeb Erekat said the Palestinians were ready to negotiate a final peace deal.

"I believe Mr. Olmert knows he has a partner, and that is President Abbas. He knows that to achieve peace and security for all, we need to shoot for the end game," Erekat said.

As a first step, Erekat added, the two sides need to sustain the cease-fire that was announced earlier this week between Israel and the Palestinians and to extend it to the West Bank. "That will open the key to a political horizon," he said.

Hamas spokesmen, on the other hand, denounced Olmert's statements as "a new conspiracy" against the Palestinians. Referring to Olmert's demand that the Palestinians relinquish the right of return for the refugees to their original homes inside Israel, Ghazi Hamad, spokesman for the Hamas-led government said: "This is a conspiracy, especially since Olmert is trying to bypass the core of the Palestinian cause, namely the right of return for the refugees. This speech is lacking in clarity."

Syria-based Musa Abu Marzouk, the No. 2 man in the Hamas leadership, said the right of return for the refugees is "sacred" for all Palestinians. "The Palestinian people will never give up this sacred right," he said. "Our people have been fighting for 58 years to achieve the right of return for all those who were expelled from their homeland. We reject any deal that does not recognize the right of return."

Taysir Khaled, member of the PLO executive committee and a representative of the Democratic Front for the Liberation of Palestine, said the content of Olmert's speech reflected a hard-line stance.

"How can Olmert ask the Palestinians to renounce their right to resist the occupation?" he asked, referring to Olmert's call for ending Palestinian terror. "We also don't understand his demand that the Palestinians give up the right of return for the refugees and form a unity government according to conditions set by the US and Israel."

Hamas's parliamentary list condemned Olmert's remarks as a "deceit intended to beautify the face of the occupation. The list said that the Palestinians are insisting that Israel remove all the settlements from the West Bank.

Abbas's Fatah party also rejected Olmert's statements regarding the Palestinian refugees. Abdullah Abdullah, a senior Fatah official in the West Bank, described the right of return as sacred. "The right of return cannot be ignored or surrendered," he said, adding that the Palestinians are ready to go to the second phase of the road map, which calls for holding an international conference for peace in the Middle East, without conditions.