Prime Minister Ariel Sharon, voicing a rare burst of optimism Thursday over prospects for diplomatic progress, declared that conditions were now ripe for a "historic breakthrough" between Israel and the Palestinians.

Sharon spoke as the Palestinian Authority issued a weapons ban to curtail the widespread bearing of arms in the Palestinian population. The PA also named as its new over-all security chief Nasser Yusef, a tough official who had in the past led crackdowns on militants in the territories.

Over the past two days, Foreign Minister Silvan Shalom and Finance Minister Benjamin Netanyahu expressed doubts over the credibility of PA Chairman Mahmoud Abbas' campaign to forge a cease-fire and pave a return to the negotiating table.

But in a Tel Aviv speech Thursday evening, Sharon welcomed the recent Palestinian moves.

"I believe that the conditions are now ripe to allow us and the Palestinians to reach a historic breakthrough in the relations between us," Sharon said.

"If the Palestinians act in a comprehensive fashion to fight terror, violence and incitement," Sharon said, "we can move forward to the process of implementing the 'road map,' and then we can coordinate various activities with them regarding the disengagement plan."

Peres: Diplomatic developments exceeding expectations

Vice Premier Shimon Peres said Thursday he expected Sharon would renew talks with Palestinian leaders in a matter of "days, not weeks."

Arriving at the World Economic Forum, Peres said the development toward peacemaking in recent days "exceeds our expectations."

"I think we can move faster than we thought earlier - faster and better if nothing wrong will occur." Peres said it was important that progress be made in the political arena, as well as in issues such as security, in keeping with progress made on the economic front.

Former Palestinian security chief Mohammed Dahlan said Thursday that Israel had given a measure of agreement to withdraw forces from West Bank cities and give Palestinians policing rights in those areas. "Israel has agreed in principle to renew the understandings that were reached when Abbas was prime minister," in July 2003, Dahlan said.

Palestinian cabinet minister Saeb Erekat said he proposed a mutual cease-fire declaration in his meeting Wednesday with Sharon aide Dov Weisglass.

"We are willing to have a cease-fire, and we have informed the Israelis of this and we are waiting for an answer from them as soon as possible," Abbas told reporters Thursday, before leaving the West Bank for visits to Jordan, Egypt, Switzerland, Russia and Turkey.

"They [the Israelis] did not reject this. They will give us the final answer next week," he said.

Earlier on Thursday, Shalom said of the Abbas-brokered truce, "Whoever thinks a halt is the right thing, is mistaken. A cease-fire is a ticking bomb which will blow up in our faces."

According to Shalom, if militants use a cease-fire to rebuild their infrastructure, at some point in the future "they can carry out one terrorist attack or a series of terror attacks, which will bring down this whole process and send it to hell."