Peres says he will take party out of coalition

The Israeli Foreign Minister, Shimon Peres, flew to an international conference in Bucharest after threatening to resign and take his seven Labour ministerial colleagues into opposition. He has made such threats repeatedly since Ariel Sharon formed his uneasy national-unity coalition nine months ago, but they are being taken more seriously this time.

The Labour ministers walked out of an emergency meeting late on Monday night before the cabinet voted that the Palestinian Authority was "an entity that supports terrorism, and must be dealt with accordingly". The Prime Minister, Mr Sharon, had rejected a Labour request to postpone a decision for a week and give Yasser Arafat a last chance to rein in the bombers.

Israel Radio quoted Mr Peres, who shared a Nobel Peace Prize with Mr Arafat, as suspecting the government was trying to overthrow the Palestinian Authority and rely on force alone with no hope of a diplomatic solution. Another Labour minister, the former general Matan Vilnai, emphasised that the coalition crisis was "very real and very grave".

Yossi Beilin, Justice Minister in the last Labour government and an architect of the 1993 Oslo breakthrough between Israel and the Palestinians, wrote in the mass-circulation Yediot Aharonot yesterday: "The war that Sharon is planning is a war that can still be prevented. The war will push us many years away from the chance of leading a normal life." Soundings among the 26 Labour MPs suggested most favoured leaving the government, but Labour ministers were still waiting for a lead from Mr Peres.

Colette Avital, a Labour backbencher close to the Foreign Minister, told The Independent: "Peres has always believed that he can exert a bigger influence on Sharon by being inside rather than in opposition. He will leave the government only if he's convinced that Israel's strategy is to topple Arafat and the Palestinian Authority."

Like most of her colleagues, Ms Avital, a retired ambassador, agreed Israel had to hit back after 28 people were killed in three suicide bombings. But she questioned the form of the retaliation. "Bombarding targets associated personally with Arafat is not fighting against terrorism," she said. Her ultimate worry was what would happen if Mr Arafat were deposed. "We have to look at all the consequences," she insisted. "If we topple Arafat, are we ready to reoccupy all those territories and be again the masters of all those Palestinians? If not, who will replace Arafat?"

The most likely candidate was Hamas. "Then," she warned, "we'll be even worse off. Hamas has signed no international agreement with us. Hamas doesn't even recognise the existence of the state of Israel. Maybe we can't reach a peace agreement with Arafat, but we may still be able to achieve a ceasefire."