A senior Israeli official said the two sides had failed to reach an understanding on a planned joint statement to be published at the end on Wednesday's three-way summit aimed at kickstarting a peace roadmap.

The source said the two parties could not agree on what would have been a historic statement, due to differences on the core issue of Palestinian refugees and despite mediation by US envoy William Burns.

The Palestinians refuse to waive the right of return of refugees by officially recognising Israel as a Jewish state.

Hopes that the summit in the Red Sea resort of Aqaba would yield a Palestinian ceasefire agreement were already dashed on Sunday, after Palestinian culture minister Ziad Abu Amer said it was premature.

"It is clear it won't be possible to announce a ceasefire before or at the summit," Abu Amer, one of the top men involved in truce talks with radical groups such as Hamas, told AFP on Sunday.

Today, Abbas will first attend another summit hosted by Egyptian President Hosni Mubarak at the Red Sea resort of Sharm el-Sheikh that will group Bush with a number of moderate Arab leaders.

The so-called roadmap for peace which both sides have accepted calls on the Palestinians to disarm radical militant groups as part of the first phase of the blueprint.

It also demands that Israel freeze all settlement activity and dismantle all outposts built in the West Bank since Sharon took power in March 2001.

But Israeli Deputy Defence Minister Zeev Boim told army radio that "dismantlement is only being considered for blatantly illegal settlements, which do not exceed 10 cases".

Meanwhile after the Israeli army said it was easing a blockade on the Palestinian territories, more than 10,000 Palestinians were allowed to cross from the Gaza Strip into Israel through the Erez checkpoint yesterday.

A total of 14,318 Palestinians were handed a permit to cross through the Erez checkpoint, in line with the figures announced by the Israeli army on Sunday.

The Palestinian sources also said that the army had reopened the southern crossing point of Sufa, through which dozens of farmers crossed into Israel.

According to the military administration, the easing of the restrictions should allow 25,000 Palestinians, including 15,000 from the Gaza Strip to cross the Green line and reach their jobs in Israel in the next few days.

Violence continued in the occupied territories with the overnight killing by the Israeli army of a Palestinian militant in the central Gaza Strip.

The gunman opened fire on a patrol near the Kissufim crossing point before being shot down, security sources on both sides said.

A political leader of the Popular Front for the Liberation of Palestine, a secular movement, was also arrested overnight in the West Bank refugee camp of Balata near Nablus, witnesses said.