OCCUPIED JERUSALEM, 19 December — In a move likely to fuel more violence and bloodshed, Israel gave its troops sweeping powers to kill any Palestinian they deem a security threat as an extremist Israeli minister warned the Palestinians would be expelled from their homes in the West Bank and Gaza Strip if they did not stop their armed struggle against Israel. According to Israeli press the army has allowed its troops to open fire on any armed Palestinian not in uniform in Palestinian self-ruled areas.

In Israeli-controlled areas of the West Bank and the Gaza Strip, Israeli troops are permitted to fire on any Palestinian spotted with a weapon, the daily Yediot Aharanoth said yesterday.

Until now, Israeli forces had only been allowed to fire if they were shot at or if they were directly threatened.

Under the new rules of engagement, the army shot dead an armed Palestinian security officer in civilian clothes near Nablus in the West Bank Monday. The army said the man was approaching an army position set up on land under Palestinian control, according to the 1993 Oslo peace accords.

Israeli forces in the Gaza Strip also shot dead a 12-year-old Palestinian boy on Monday playing with a plastic toy rifle in the Gaza Strip town of Khan Younis, which lies next to the Jewish settlement bloc of Gush Katif..

Israeli Tourism Minister Benjamin Elon told Israel Army Radio "If Palestinians do not stop the war that they initiated, they must understand that there is no such thing as a luxury war, and that when they lose the war, they will be expelled from here."

Elon, of the ultra-nationalist Moledet (Homeland) Party, recently replaced former Tourism Minister Rehavam Zeevi who was assassinated in a Jerusalem hotel on Oct. 17 by activists from the Popular Front for the Liberation of Palestine. "If they wage war against us ... and we call on them again and again to make peace, and they are unwilling to stop, then just as the War of Independence (the Middle East war which followed Israel’s founding in 1948) ended with a demographic and geographical change, so too will this war," Elon, who is also a rabbi, said.

He said the Palestinians must decide whether to live with Israel in peace "or to expel us from our land". "It is they who will be expelled, not us," he warned.

Calling Arafat "irrelevant", "evil" and a "murderer", he said he was leading the Palestinians into a disaster. "They must understand this. They must get rid of him," he said.

A senior Israeli defense official was quoted by army radio as saying yesterday Hamas had shifted the focus in its war against Israel and now was planning to attack strategic targets.

In another development, US Secretary of State Colin Powell intervened in the Middle East crisis yesterday, urging Palestinian leader Yasser Arafat to crack down on activists and telling Israeli Prime Minister Ariel Sharon to be ready to respond. State Department spokesman Richard Boucher said Powell told Arafat in a telephone call that the United States welcomed his latest steps to crack down on extremists but needed to see more of them.

"The secretary noted that we have seen some positive actions from the Palestinian side but also said those actions need to be completed ... There need to be more actions to make an effective end to the violence," he said.

In a separate telephone conversation with Sharon, Powell said Israel should be prepared to respond to Arafat’s steps.

Israeli officials, meanwhile, acknowledged yesterday they were maintaining high-level contacts with Palestinian leaders.Israeli Foreign Ministry and political sources confirmed contacts were continuing although not with Arafat, who is under intense US and Israeli pressure to take action to back up his appeal on Sunday for activists to end attacks on Israelis.

"There are contacts under way at different levels and varying degrees of intensity," one Foreign Ministry source said. "There is no decision by the government against meeting the Palestinians or talking to them."

The decision to keep contacts open but not talk to Arafat could be intended to further undermine the Palestinian leader, whom Israel blames for a recent wave of Palestinian attacks because he has failed to rein in fighters.