President Bush has hailed as "historic and courageous" Ariel Sharon's unilateral 'disengagement plan' which would see the Israelis remove some military installations and all settlements from Palestinian-controlled Gaza, but retain possession of certain West Bank settlements.

Welcoming the plan, President Bush said that it was now "unrealistic" to expect that the outcome of final status negotiations on borders will be a "full and complete return" to the armistice lines of 1949.

Territory ceded to Israel in the 1967 conflict would stay within Israel's control "in light of new realities on the ground", Mr Bush said.

However, it was realistic to expect that any final status agreement could only be achieved on the basis of mutually agreed changes that reflect these realities, the plan stipulates.

The refugees which fled to neighbouring states during years of conflict in the region will, it seems, not be allowed to resettle inside Israel.

A resolution to the refugee issue would need to be found through the "establishment of a Palestinian state and the settling of Palestinian refugees there, rather than Israel", the press pack was told.

The details of the disengagement process, which was announced at a joint press conference in Washington yesterday, are contained in two letters between Mr Bush and Mr Sharon.

"If all parties choose to embrace this moment they can open the door to progress and put an end to one of the world's longest running conflicts," an enthusiastic George Bush told reporters.

He went on to urge the Palestinians and their Arab neighbours to "match that boldness and that courage" shown by Mr Sharon.

In a letter to the President setting out his plan, the Israeli Prime Minister said that he unilaterally came up with the initiative "as there exists no Palestinian partner with whom to advance peacefully toward a settlement".

The Israelis have said that they will engage into a process of "gradual disengagement", which is intended to reduce friction between Israelis and Palestinians.

Through disengagement, Israel's security, and political and economic situation, would stabilise and improve, Mr Sharon said.

However, the plan would not subvert the US-brokered roadmap – it was intended to pave the way for "creating the necessary conditions" for the resumption of direct negotiations.

On returning from Washington, Mr Sharon said that he would submit the plan for the approval of the Israeli Cabinet and the Knesset – "and I firmly believe that it will win such approval," he said.

(gmcg)