Israeli Prime Minister Ariel Sharon is considering releasing some Islamic militant prisoners to advance a U.S.-backed "road map" to peace with the Palestinians, Israeli diplomatic sources said Thursday.

Sharon has freed some Palestinian prisoners in recent weeks but has refused to release any militants. The Palestinians want him to do so to show his commitment to peace efforts.

Sharon and Palestinian Prime Minister Mahmoud Abbas hope to make progress on the prisoners issue at a meeting next week before each travels to Washington for separate talks with President Bush, whose increased role in peacemaking has fueled cautious optimism.

Abbas is set to meet and have lunch with Bush on July 25, their first talks in Washington. Sharon will meet Bush four days later, a White House spokesman said. The Palestinians say the date of the Abbas-Sharon meeting has not been agreed yet.

The Israeli diplomatic sources said Sharon was considering releasing several hundred militants who did not have a direct role in attacks on Israelis in the more than 33-month-old uprising for independence.

"The prime minister is thinking of expanding the criteria as a goodwill gesture," one source said.

The Palestinian leadership welcomed the report. "If this is true, this would be a positive step and we consider it helpful to maintaining the calm," Information Minister Nabil Amr said.

Israel fears that releasing men "with blood on their hands" would set back peace efforts. Palestinians, bound by clan ties and suffering economically from the loss of their menfolk in the conflict, say a broad amnesty is crucial to peace hopes.

MILITANTS RESTATE DEMANDS

Abbas and Sharon have accepted the road map, drawn up by the United States, Russia, the United Nations and the European Union. It sets out reciprocal steps to end violence and establish a Palestinian state beside Israel in 2005.

In a positive move, a small group of Israeli and Palestinian parliamentarians agreed at a meeting in Geneva to set up a working group to boost cooperation between the assemblies.

Palestinian parliamentarian Jawad Tibi said he hoped the meeting was a first step toward building a "good bridge over the gap that has existed between us, and still exists."

But progress on the road map has proved difficult.

Leading Palestinian militant groups have declared a three-month truce but are alarmed that Israel continues to arrest their members and have told Abbas he must insist on the release of all 6,000 Palestinian prisoners.

"Freedom of prisoners must not be tied to and governed by the good or bad intentions of Israel," said Mohammed al-Hindi of Islamic Jihad, a group which has carried out suicide bombings. "All prisoners must eventually be freed."

The Al-Aqsa Martyrs Brigades, an armed group which has links with Palestinian President Yasser Arafat's Fatah movement, said that if Israel continues to arrest its members "we will end the truce and our retaliation will be severe."

The army said it had arrested seven more suspected militants in the West Bank overnight.

Abbas has hesitated to confront militants for fear of civil war. Even his decision to travel to Washington to see Bush drew censure from Palestinians suspicious of the United States. "We do not rule out the possibility that Bush will put pressure on Abu Mazen (Abbas) to crack down on Palestinian (militant) factions," said Abdallah al-Shami of Islamic Jihad.

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