"From the point of view of military requiurements we could reach an agreement with Syria by giving up the Golan," Yaalon told the Yediot Aharonot daily.

"The army could defend Israel's borders wherever they are, if the political authority makes the decision" to withdraw from the Golan, he said.

A senior official close to Prime Minister Ariel Sharon made it clear however that such a decision was not imminent.

"We will only negotiate with Syria if it first gives up its support for terrorist acts against Israel and makes no preconditions about the nature of a final agreement," he said.

Israel accuses Syria of supporting radical Palestinian groups such as Hamas and Lebanon's Hezbollah movement, whose militia clash sporadically with Israeli troops over a disputed border region.

Sharon himself has frequently voiced opposition to giving up the Golan Heights, which Israel annexed in 1981.

In the last talks between the two sides which broke down in January 2000 Israel's then Labour government offered to give up the territory captured in 1967 except for a strip on the shores of the Sea of Galilee, which Syria would not accept.

Meanwhile, a Palestinian militant killed a Jewish settler and wounded another before being shot dead in the West Bank yesterday, a military source said.

The Palestinian opened fire on the settlers' car near the settlement of Itamar, in the northern West Bank, fatally wounding one and injuring the other less seriously.

Al-Aqsa Martyrs Brigades, an armed offshoot of Palestinian leader Yasser Arafat's Fatah movement, claimed responsibility for the attack, naming the militant as Yussef Ahmed Hanani, 25, a lieutenant in the Palestinian preventive security police.

The deaths brought to 4,228 the overall toll since the September 2000 launch of the intifada, or Palestinian uprising, including 3,230 Palestinians and 927 Israelis, according to an AFP tally.

Earlier Deputy Prime Minister Ehud Olmert revealed Thursday that Israel is set to remove "many more settlements," although his comments reportedly irritated his boss Ariel Sharon.

"We are intending to remove four settlements from Samaria (the northern West Bank), but they will not be the last ones," Olmert was quoted as telling private Channel 2 television as he toured two Jewish settlements near the West Bank city of Ramallah.

"We will clear many more settlements, not because we want to but because we have no choice if we want to reduce our confrontation with the rest of the world."

Under the terms of Sharon's so-called disengagement plan, Israel is to withdraw all its soldiers and settlers from the Gaza Strip and from four other settlements in the northern West Bank by the end of 2005.