Key Points:

The former head of Israel's army yesterday praised the New Zealand government for rescinding a warrant for his arrest, and said he was continuing his trip around the country.

Moshe Yaalon, who was chief of staff of the Israel Defence Forces until June last year, told Israel's Army Radio he knew human rights activists intended to take legal action against him.

"But I am glad New Zealand is one of the countries that implements the law the right way and does not allow people who want to make propaganda to use [the law] to attack people like us," he said.

Yaalon said he was staying in New Zealand despite the Auckland District Court arrest warrant which Attorney General, Deputy Prime Minister Michael Cullen, overruled on Thursday. "I am continuing to travel in New Zealand. I did not run away from anywhere and I don't intend to run away," Yaalon said.

Activists want him tried for his alleged part in the assassination in Gaza of a leading Hamas figure Salah Shehadeh, who was killed by a one ton bomb dropped by the Israeli Airforce on his house in 2002. The bomb killed at least 14 civilians.

The Palestinian Centre for Human Rights said Palestinians were "devastated" by Cullen's decision.