Israel agreed on Friday to hand security control of four West Bank cities to Palestinian authorities by the end of August to push Palestinian militants to honor a truce crucial to peace moves, security sources said.

They said any further "terror attacks" would scuttle the accord reached by Defense Minister Shaul Mofaz and Palestinian Security Minister Mohammed Dahlan after a weeks-long impasse over how to implement a U.S.-backed "road map" peace plan.

Dahlan's spokesman said the meeting had a "very positive" outcome against expectations. But militants dismissed the deal as "worthless" as Israel had not dropped a policy to hunt them down for previous attacks in a 34-month-old uprising.

A six-week-old unilateral cease-fire declared by militant factions frayed badly this week with two Palestinian suicide bombings avenging continued Israeli army raids that have killed some wanted militants and netted dozens more.

Whether Friday's deal would be carried out was uncertain at best as militant group Islamic Jihad threatened retribution "like an earthquake" after Israeli troops killed its Hebron commander in a shootout on Thursday after trying to arrest him.

An Israeli Defense Ministry spokeswoman said Mofaz agreed to pull back forces from Jericho and Qalqilya early next week and the larger cities of Ramallah and Tulkarm in about two weeks.

"There are three conditions for this transfer -- that they (Palestinian police) fight terror, establish an apparatus to neutralize wanted terrorists and that there are no terrorist attacks in this (handover period)," she told Reuters.

The "road map" peace plan charts reciprocal steps toward a Palestinian state by 2005 in the West Bank and Gaza Strip which Israel seized in the 1967 Middle East war. Stubborn violence and deep mistrust have bogged down the plan since its June launch.

Israeli army pullbacks and a halt to bombing and shooting attacks by militants are key requirements of the plan. Israeli troops vacated the West Bank city of Bethlehem and parts of Gaza in early July but the process then stalled.

ISRAEL TOUTS GESTURE, MILITANTS SCORN IT

"This is an Israeli attempt to rescue the cease-fire. But given Islamic Jihad's threat, we are not too optimistic about the outcome," a senior security source told Reuters.

Palestinians had been demanding Israel turn over Ramallah, headquarters of a moderate government in office since May and dedicated to peaceful change, to prove goodwill on the road map.

They had earlier rejected offers of Qalqilya and Jericho as insulting, noting the first was ringed by a new Israeli security wall and the other largely calm and spared of direct occupation.

"This deal is worthless. Qalqilya is totally isolated, Jericho was never entered by occupation forces and there is (no) halt to all sorts of assaults (raids) on our people," said Abdel Aziz al-Rantissi, senior spokesman for Hamas militants.

"The Zionist enemy is playing games and the Palestinian authorities are trying to market them," he said in Gaza City.

Israel says it has the right to keep hunting down wanted militants because Palestinian authorities were refusing to disarm them. Palestinian officials say they fear such a move would spark civil war unless Israel withdraws forces first.

Rightist parties dominating Israel's government oppose ceding territory sprinkled with Jewish settlements and the cabinet accepted the "road map" only under heavy U.S. pressure.

Dahlan accused the Israeli government on Thursday of trying with continued raids to goad militants into renewed violence so it could justify a reluctance to grant Palestinians sovereignty.

Elias Zananiri, Dahlan's spokesman, said Israel also pledged steps to ease movement of Palestinian civilians bottled up by army roadblocks that have crippled trade and bred resentment on which militants opposed to a negotiated peace thrive.

Some major West Bank checkpoints were removed this month but reimposed after Tuesday's suicide attacks.

Security sources said Israel further agreed to permit Palestinian President Yasser Arafat, trapped by Israeli troops in his half-demolished Ramallah compound for 18 months, to make one trip "of a few hours" to Gaza to pay final respects to a sister who died this week and was buried in the territory.

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