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An agreement reached between Israel and the United States on the disputed Shaba Farms area, located on Israel's border with Lebanon, enabled a breakthrough in reaching a cease-fire resolution at the United Nations on Friday.

In letters exchanged between U.S. and Israeli leaders, U.S. officials assured Israel that UN Secretary-General Kofi Annan would be authorized to determine whether the area belongs to Lebanon or Syria, but that the future status of the territory would only be determined in negotiations between Israel and Farms' rightful owners.

A senior government source said that Israel would not be obligated to withdraw from Shaba Farms, even if Annan's investigation determines that they belong to Lebanon.

In the negotiations that preceded the cease-fire deal, Lebanon demanded that Israel hand over Shaba Farms as a "deposit" to the UN, with the small strip of territory later to be given to either Lebanon or Syria, according to the results of Annan's investigation.

But Olmert strongly opposed the Lebanese demand, telling U.S. officials that Israel viewed the Shaba Farms as part of the Golan Heights, which was captured by Israel from Syria in 1967. He said that a withdrawal from part of the Golan would require a majority of 61 members of Knesset - a majority he does not have - or a national referendum. In 1981, the Knesset voted to extend Israeli law to the Golan.

With Olmert refusing to budge on the Shaba issue, the UN Security Council announced that Annan would determine the exact delineation of area of the Farms and present his findings to the Security Council within 30 days.

When Israel withdrew from south Lebanon in May 2000, the UN determined that the Farms were Syrian territory and that their future therefore had to be determined in negotiations between Jerusalem and Damascus.

A government source said Friday that Olmert, Defense Minister Amir Peretz and Foreign Minister Tzipi Livni had agreed to the UN cease-fire resolution following last-minute changes to the text. "The various key ministers have voiced satisfaction at the amendments made over the last few hours," the source said. "For implementation by Israel, this now requires a cabinet vote. The idea is that the military offensive will continue until then."

Earlier Friday, Olmert issued the order for an expanded ground operation after diplomatic efforts at the UN appeared to be faltering. Another stumbling block was Lebanon's opposition to a more robust contingent of UNIFIL troops and to granting UNIFIL the authority to enforce the cease-fire.

Olmert thanks BushOlmert thanked U.S. President George W. Bush Friday for his work on the UN Security Council resolution to stop violence between Israel and Hezbollah, the White House said in recounting the first direct talks between the two leaders since the fighting began.

The eight-minute phone call with Bush at his ranch in Texas was initiated by Olmert, said Frederick Jones, spokesman for the National Security Council at the White House.

"The president expressed his view that the crisis was provoked by Hezbollah with the support of Iran and Syria and that we need to ensure that the reach of the Lebanese government extends throughout the country," Jones said.