GAZA - Israel demolished Palestinian houses in Gaza yesterday and said it would build new homes for Jewish settlers in the West Bank city of Hebron.
These developments came a day after the United States announced its Middle East peace drive.
Israel also said it would replace mobile homes in the Jewishsettlement in Hebron with concrete houses, despite US Secretary of State Colin Powell's call to halt settlement construction.
Palestinians called the Israeli decision a "flagrant challenge to the American Administration".
In the Rafah refugee camp in Gaza, Palestinian witnesses said tanks and bulldozers rumbled into a Palestinian-ruled area and wrecked 18 houses, leaving families homeless during Ramadan.
Television pictures showed Palestinians sifting through the rubble to pick out their belongings.
The Army said it destroyed two uninhabited homes and denied the area was under Palestinian control.
It said the raid came after gunmen fired on soldiers in the area and threw grenades at nearby outposts.
Omar Abu Shaweesh, a father of six who lives in Rafah, said the bulldozers moved in at night.
"We were asleep when they came. We started to run, taking the children out.
"We were confused. We didn't know what to do but to run."
Yarden Vatikay, a spokesman for Defence Minister Binyamin Ben-Eliezer, said the mobile homes were being replaced because they had become unsafe since the uprising flared.
Israeli troops guarding the settlement in the divided city and Palestinian gunmen often exchanged fire and people on both sides had been killed or wounded in the fighting.
"There is no political issue here, it is a security issue," Vatikay said. He said Israel was taking similar steps in the Gaza Strip, where it was replacing metal classrooms and homes with concrete ones that could better withstand gunfire.
In Geneva, Amnesty International said Israel was increasingly using torture to interrogate Palestinians but Israel said the practice was banned and complaints were investigated.