Rocked and chastened by withering criticism from the Bush Administration, and faced with a personal demand from President Bush, the Israeli government is set to order its army to begin pulling out of Palestinian cities in the West Bank within the next two days, official sources said last night.
If so, the pull-out would represent both a public humiliation for the government of the Prime Minister, Mr Ariel Sharon, which had initially tried to shake off the diplomatic crisis with the United States, and a failure to achieve the onslaught's prime military aim, which was to track down those who planned and carried out last week's assassination of Israel's Tourism Minister, Mr Rehavam Ze'evi, in Jerusalem.
Israeli troops have killed "around 20 terrorists" and arrested 20 more in the six days since they began entering Palestinian-held territory, the army's chief of staff, Gen Shaul Mofaz, said yesterday.
It included leading figures from Hamas and the military wing of the Popular Front for the Liberation of Palestine, the faction that claimed responsibility for killing Mr Ze'evi.
But the troops' re-entry into parts of six of the eight big Palestinian cities in the West Bank, and the curfews still being imposed there, have embittered tens of thousands of residents who have been confined to their homes, seen several civilians killed, triggered international protests including a lament from Pope John Paul II about gunfire in the heart of Bethlehem, and produced a devastating decline in Israeli-American ties.
Mr Bush, reportedly incandescent at the potential damage the onslaught is doing to his wooing of moderate Arab support for the anti-terror coalition, is said to have fumed at one meeting with advisers that Israel "can go to hell".
After a State Department spokesman announced on Monday that the US wanted the army "withdrawn immediately from all Palestinian-controlled areas", Mr Sharon countered by dispatching a spokesman to declare that Israel was merely "exerting its right to self defence".
Yesterday morning, Mr Sharon was still brazening out the dispute, purporting to be interpreting Washington's fury as merely "an announcement from a spokesman".
But when it became clear that Mr Bush was changing his schedule in order to meet at the White House with the visiting Israeli Foreign Minister, Mr Shimon Peres, and personally convey his demand for the Israeli withdrawal, the prime minister apparently began to back down. Reports from Washington last night indicated that Mr Bush had indeed "dropped in" for half an hour of Mr Peres's meeting with National Security Adviser, Ms Condoleezza Rice, and had insisted that Israel leave the Palestinian areas immediately.
Mr Peres reportedly said the pull-out would take place very shortly.
When the foreign minister also protested to Mr Bush that the Palestinian Authority President, Mr Yasser Arafat, was misleading the world, in purporting to fight terrorism while actually doing nothing to stop it, the Americans reportedly reassured him that the anti-coalition would "deal with" Mr Arafat later on.
Street battles continued in Bethlehem yesterday - where a hospital and an orphanage came under fire.
Shooting was suspended, in a somewhat surreal tacit agreement, to allow 6,000 marchers, led by Christian and Muslim clergymen, to walk to the Church of the Nativity in Manger Square, where a Palestinian man was killed on Sunday.
Two Palestinians were killed in Tulkarm, and a 13-year-old from Qalkilya died of injuries sustained on Monday.
In Nablus, thousands chanted for revenge at the funeral of Aym an Halaweh, a Hamas bombmaker who was killed, presumably by Israel, when his car exploded Monday.