Prime Minister Ehud Olmert and Defense Minister Amir Peretz exhibited a "correct relationship" during a meeting of the political-security cabinet yesterday, showing no sign of the well-publicized dispute between them, participants said.

The recent tension began after Peretz discussed a cease-fire in a telephone conversation with Palestinian Authority Chairman Mahmoud Abbas on Sunday. Since then, there has been a major crisis of confidence, which will form the backdrop to today's weekly meeting between Peretz and Olmert.

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The two are not expected to use the meeting as a chance to reconcile, although they tried to send the message during the cabinet meeting that matters of state are not being affected by the leadership rift.

Yesterday, a consultation involving Olmert, Peretz and the heads of the Israel Defense Forces and Shin Bet security service, which was set to take place before the cabinet meeting, was canceled at the last minute. Olmert's bureau blamed a scheduling conflict. Instead of the planned consultation, Olmert met with his assistants and Military Secretary Gadi Shamni presented the recommendations of the defense establishment.

Olmert's bureau, meanwhile, said the intelligence sources it used to discover that Peretz initiated the call to Abbas, as Channel 2 television reported Tuesday, were not top-secret. Olmert said that by calling Abbas, Peretz exceeded his authority, damaged existing contact with the Palestinians and failed to give a full and accurate report of the conversation.

The Peretz camp accused the Olmert camp of maintaining contact with the Palestinians without informing the defense minister about it. Peretz said Abbas initiated the call and that he was merely calling back the Palestinian leader, and accused Olmert of using classified information against him.

"Amir won't put down the phone on anyone who calls him," said an associate of Peretz's. "He's the defense minister and chairman of the Labor Party, and will also advance peace issues. That's why he was elected."

The veiled threats by officials in Olmert's bureau regarding Peretz's possible dismissal have lost their luster, but the prime minister's associates are warning that the crisis isn't over yet.

Peretz's associates, meanwhile, say Olmert is trying to get him to quit the Defense Ministry, but that he does not intend to give up.

Although Sunday's phone call appears to have triggered the Olmert-Peretz dispute, it came after an extended weary relationship in which each built up a simmering anger against the other.

Peretz associates say Olmert is trying to ruin him politically while damaging Israel's national interests. It remains unclear how, or whether, this crisis will end. Throughout yesterday, bureau members on both sides attempted to exert calm ahead of the planned meeting today.

Meanwhile, Peretz is also struggling to cope with the lack of support he has received from the Labor Party. He is particularly upset with the party's secretary general, Minister Eitan Cabel, who called on him to resign as defense minister.

"That's unforgivable," said a Peretz associate. "His behavior deviates from all human standards of interpersonal interaction."