The 20 men from the al-Aqsa Martyrs Brigades are wanted by Israel for attacks during a 34-month-old Palestinian uprising, and had taken refuge in Arafat's "muqata" compound in the West Bank city of Ramallah, Palestinian security sources said.

They were detained by Arafat's security forces after Israel proposed in security talks with the Palestinian side that the men be jailed in Jericho, one of the few West Bank cities still under full Palestinian control, Israeli security sources said.

"There were negotiations between Israeli and Palestinian officials on moving the wanted muqata men to Jericho, but no agreement was reached," a senior Palestinian official said.

The Brigades, an armed offshoot of Arafat's Fatah faction, said in a statement it would "strike with an iron fist" if the Jericho transfer went ahead, ending a three-month truce militant groups declared on June 29 to give a US-backed "road map" to Palestinian statehood in the West Bank and Gaza Strip a chance.

"Arafat sold us out," one of the detainees told Reuters by phone from the room in the muqata where the Brigades group had been confined overnight. "We are very disappointed that he has yielded to the conspiracies of the Zionists and Americans."

The Palestinian president and his reformist prime minister, Mahmoud Abbas, have been under pressure to disarm the militants, but are reluctant to order a crackdown for fear of civil war.

An Israeli security source said the Jericho proposal was aimed at giving Arafat a chance to demonstrate "good faith" after sheltering the militants for a undisclosed period.

"Arafat also hopes this will pave the way for a withdrawal from Ramallah," the source said. Israel ordered limited troop pullbacks elsewhere after the road map was launched on June 4.

In talks Wednesday, Palestinian Security Affairs Minister Mohammad Dahlan rejected an Israeli offer to withdraw troops from around Jericho and a second West Bank town, Qalqilya.

He insisted instead Israel withdraw from Ramallah, which would have meant lifting the confinement of Arafat and freeing the militants in his compound. Israel rejected the demand.

Under the "road map" sponsored by President Bush, Israel and the Palestinians agreed to an immediate cease-fire, halting suicide bombing campaigns and other violence.

As a confidence-building measure, Israel has agreed to release 540 Palestinian prisoners from among 6,000 being held. But it refuses to free those it says have attacked Israelis.

In May 2002, Israel relaxed a blockade of tanks around the muqata after Arafat agreed to transfer five militants who had hidden there to a Jericho jail under US and British auspices.

A Palestinian security source said US and British officials had visited Arafat's compound Saturday in an apparent mediation effort. The countries had no immediate comment.