The Palestinian government has begun issuing papers to thousands of Gaza residents caught in a legal limbo with no residence permits, an Interior Ministry official said yesterday but Israel continues to regard them as non-persons.

Tens of thousands of Palestinians returned to the West Bank and Gaza in the days after interim peace agreements were signed in the early 1990s, entering on temporary permits. But the atmosphere of peace has evaporated in violence, and the Palestinians who returned are stuck with expired permits and no formal papers.

According to the agreements, Israel must approve changes in the population registry, but since the latest round of violence erupted in 2000, Israel has refused to allow any changes.

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Israel is wary of giving legal status to returning Palestinians, as it rejects the "right of return." Palestinians insist they have the right to go back to their original homes in Israel.

Also, following an election victory by the Hamas a year ago, Israel has boycotted the Hamas-controlled Interior Ministry.

Riyad Zaitounia, director of civil affairs in the Interior Ministry in Gaza, said the registration campaign aims to grant local IDs for use inside the territories only, allowing residents with expired visit permits or travel documents to deal with banks, register in schools, and deal with government authorities.

He said the new papers cannot be used for travel to Israel or abroad.

Zaitounia said there are at least 30,000 Gaza residents unrecorded in the population registry.

'We can't specify the exact number. Those who entered legally we know,' he said. 'The first aim is to quantify and identify where those people live and how many entered.'

Human rights groups and other ministry officials put the number closer to 50,000.

Shlomo Dror, spokesman for the coordinator of Israeli activities in the Palestinian territories, said Israel has no responsibility over Gaza since its pullout. 'So we are not interfering with giving IDs,' Dror said.

The registration campaign has not started in the West Bank, where it would be complicated by the fact that Israel still controls the territory. Registering illegal residents could be used as a pretext for arresting them, said Sari Bashi, a human rights activist.

Dror said Israel would not allow such registration there. "The West Bank is still under our responsibility. We are still controlling it. The Palestinians can't come in and go out," he said.