Vice Premier Shimon Peres said on Thursday that "the government cannot evacuate more settlements in Judea and Samaria," given that Israel has continued to suffer rocket attacks since last summer's withdrawal from Gaza.
Peres's statement, made during a visit to London, echoed words already expressed earlier this month by Prime Minister Ehud Olmert, who told the Knesset's Foreign Affairs and Defense Committee that his plan to withdraw from isolated areas of the West Bank was no longer relevant at this time.
Both statements reflect a shift in policy on the part of both Olmert and Peres, who had campaigned on the prospect of further withdrawals.
Peres said that when it comes to further construction in the territories, homes are being built to support the natural growth rate.
"There is natural growth of settlements. The government does not fund this, it is privately financed. We cannot stop the children [of settlers from] building homes for themselves," said Peres.
His spokesman added that it had been the policy of the Israeli government to allow for natural growth construction in Judea and Samaria.
Peres's statement ran counter to the agreement Israel has with the US under the road map, which calls on Israel to freeze all construction in the territories, including natural growth.
Still, when quizzed by a reporter at a press conference in London, Peres made sure to clarify that "there is no expansion" in the West Bank and to remind reporters that Israel had dismantled four settlements in the West Bank last summer.
He added: "We cannot punish ourselves twice, once by the rockets of the Palestinian and the other by fighting the settlers."
A spokeswoman for the Council of Jewish Communities of Judea, Samaria and the Gaza Strip, Emily Amrusi, said she did not put too much stock in Peres's words, even though she welcomed them.
"I bless him that he should continue to become enlightened," she said.
But she noted that in spite of his words about the government's construction policy in the territories, the building rate was far below that of the communities' natural growth.
In areas beyond the security fence there is no construction at all, she said.
According to the Housing and Construction Ministry, housing tenders have been published for 800 units this year and 1,500 units last year.
Even as Peres made statements in support of construction in the territories and the impossibility of withdrawal, he urged Saudi Arabian officials to speak with Israel about their plans, which call for a withdrawal to the pre-1967 border.
Peres said that if Saudi Arabia wanted to promote peace in the Middle East it should meet publicly with Israeli officials to promote its initiatives.
Peres said the Saudis could play an important role "if they step up."
"You cannot be political and do it only with money. You cannot buy out problems. You have to face them. And the regal Saudis don't do it," Peres told the news conference.
He said the rich Arab country could have an important impact with its own peacekeeping proposals.
Israeli media have reported that Prime Minister Ehud Olmert recently met secretly with a senior representative of the Saudi government in Jordan.
Peres joined Saudi Arabia's Foreign Ministry in denying that such a meeting took place. But Olmert was evasive, repeating during an interview with Israel's Army Radio on Thursday: "I think all the speculation on this issue is superfluous."
Saudi Arabia, which has no diplomatic ties with Israel, has been trying to revive a regional peace initiative it presented in 2002. Israel rejected the plan at the time, but Olmert has indicated he might be more open than his predecessor, Ariel Sharon.
The proposal called for a full Israeli withdrawal from lands it captured in the 1967 Mideast war in exchange for normalization and relations with all Arab countries.
Britain's Prime Minister Tony Blair, who plans to resign within a year, recently pledged to use his remaining time in office to work for peace between Israel and the Palestinians, and Peres said Israel welcomes Blair's efforts.
Peres called Blair a "highly respected" and "courageous leader" who is always prepared to fight for his convictions.
Blair has long had "good relations with the Palestinians and other Arab countries," ones that could allow him to follow the lead of former US President Bill Clinton and continue to promote peace in the Middle East even after he leaves office as prime minister, Peres said.
Peres welcomed Blair's long-standing efforts to push wealthy countries and corporations to promote peace in the region by improving business opportunities for Arabs living in poor areas such as the West Bank and the Gaza Strip.
Last year, Blair oversaw a Group of Eight summit in Scotland that saw world leaders propose up to $9 billion to help the Palestinians achieve peace with Israel.
In March 2005, Blair hosted a one-day global conference in London during which Palestinian leader Mahmoud Abbas won pledges from the international community for financial aid.
Blair is likely to continue those efforts during his remaining time in power.
AP contributed to this report.