Ariel Sharon, Israel's prime minister, on Sunday vetoed a planned meeting between Shimon Peres, his foreign minister, and Yassir Arafat, Palestinian leader, raising fresh obstacles in Washington's bid to calm the Israeli-Palestinian conflict as the US builds an international anti-terror coalition.

But Colin Powell, US secretary of state, downplayed the move and said Mr Sharon was still committed to holding the talks, aimed at ending nearly one year of Israeli-Palestinian violence. "I hope that they will take place in the near future," said Mr Powell, who has been pressing both sides to meet and consolidate a ceasefire announced last week.

Keeping the conflict under control is important for the US as it labours to rally various Arab and Muslim states, which complain about US support for Israel.

Gideon Saár, Israel's cabinet seceretary, said Mr Sharon called off the meeting because the Palestinian Authority failed to meet his demand of total quiet for 48 hours.

Several mortar bombs landed on a Jewish settlement in the Gaza Strip at the weekend, and Israeli tanks briefly moved into a nearby Palestinian town in response. Israel also said a Palestinian gunman who shot dead an Israeli woman settler last week was taken in for questioning by Palestinian police but promptly released. Mr Sharon has also been under pressure from right wing members of his coalition government who have demanded he overrule any meeting between Mr Peres and Mr Arafat.

The decision to call off the meeting originally scheduled for Sunday infuriated Mr Peres, who boycotted a cabinet meeting and triggered a mini-coalition crisis. Mr Peres wants to conduct diplomacy to help end the violent conflict, but was fed up with being undermined by Mr Sharon, who says all violence must end before diplomacy begins.

Palestinian officials were also angered, after holding preparatory sessions with the Israelis to ensure that the Peres-Arafat meeting helped cement the recent ceasefire. The internal Israeli disputes were seen as a sign that Mr Sharon was not serious about consolidating the ceasefire. "If they would come to the meeting, we would know that Israel is intent on implementing the [truce] agreements," said Saeb Erekat, senior Palestinian negotiator.

Tensions were also stirred on Sunday when Israel demanded the extradition of Marwan Barghouti, a leader of the Fatah movement in the West Bank and key leader of the intifada, or uprising, against Israeli occupation.