OCCUPIED JERUSALEM, 24 October — Israel and the United States were set for a battle-of-wills showdown yesterday after the Jewish state refused to heed its most powerful ally’s call to withdraw from Palestinian towns it has invaded. The US State Department issued a first warning Monday to withdraw "immediately" and stay out for good, in a stiff upbraiding of Israel after its massive tank and troop deployments in six Palestinian towns.

But after Israel shrugged off the rebuke and claimed its hand was forced by Palestinian President Yasser Arafat’s refusal to hand over the killers of an Israeli Cabinet minister, US President George W. Bush himself was gearing up to deliver a personal demand to visiting Foreign Minister Shimon Peres.

White House spokesman Ari Fleischer said Bush was to drop by Peres’ meeting with his national security adviser, Condoleezza Rice and "convey his condolences for the assassination of minister (Rehavam) Zeevi. He will also urge Israel to withdraw from Palestinian areas."

The meeting was due even as Israeli tanks killed two more Palestinians in the West Bank. The two men were hit by tank fire in the northern town of Tulkarem, Palestinian doctors said. Defiant and deadly on the streets of Palestinian towns across the West Bank, the tanks and soldiers have killed around 30 people in the Israeli Army’s biggest push in the area since granting Palestinians self-rule in 1994.

Tank shells fell near Bethlehem University shortly after a peace march led by Jerusalem’s Christian leaders demanding an end to the Israeli invasionl.

Later yesterday, the Israeli Army resorted to heavy bouts of gunfire on Palestinians in the Bethlehem area after the Jewish settlement of Gilo, in annexed east Jerusalem, came under fire from nearby Al-Aida refugee camp.

On Monday night, shells hit part of a children’s hospital in Bethlehem, while Israel also stepped up its operation of liquidating suspected Palestinian militants by killing a leader of the Islamic group Hamas in Nablus. Israel accused Aiman Halawi, 27, of organizing the deadliest attacks of the 13-month intifada.

Israel’s military sweep started after Zeevi was assassinated by gunmen from the Popular Front for the Liberation of Palestine, in revenge for Israel’s killing of PFLP chief Abu Ali Mustapha.