The Palestinians have rejected an Israeli offer to withdraw soldiers from two cities.
Israel says it is ready to pull out of Jericho and Qalqilya.
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However, the Palestinians are insisting that troops move out of Ramallah.
A pullback from Ramallah would mean Palestinian Authority Chairman Yassir Arafat would be freed from his effective house arrest in his compound in the city.
Arafat’s release is one of the Palestinians’ central demands in talks with the United States and Israel.
The Israeli offer was rejected during talks on Wednesday night between Israeli Defense Minister Shaul Mofaz and Palestinian Internal Security Minister Muhammad Dahlan.