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JERUSALEM — A surge forward on the Israeli-Palestinian peace track has catapulted the sensitive issue of Jerusalem's borders to the center of a political storm within Israel.

In a sign of just how fraught with political peril the issue has become, Prime Minister Ehud Barak made an embarrassing reversal Tuesday and canceled plans to hand over a West Bank village on Jerusalem's fringes to Palestinian control next week.

The reversal — viewed as a capitulation to hawkish forces not only in the opposition, but within Barak's own coalition — came only hours after the Israeli media reported that he intended to transfer control of Anata and two other villages near Jerusalem.

The initial reports prompted Israeli hardliners, including Interior Minister Natan Sharansky, to rush to Jewish settlements near Jerusalem to show their opposition to the plan. And the reversal upset the Palestinians.

"We were really surprised," said top Palestinian Authority negotiator Saeb Erekat. "Every time we begin a serious effort to regain the momentum of the peace process, the government sets off a political balloon test at our expense. What does this do to the peace process except damage it?"

Israel's 6.1 percent withdrawal was initially set for Jan. 20, but Palestinian Authority leader Yasser Arafat refused to accept Israel's offer, saying he wanted more populated areas closer to Jerusalem. The Palestinians indicated this week that they will accept the revised map for next week's withdrawal, which could come as early as Sunday.

On Wednesday, Israel's security cabinet approved the withdrawal map on a 5-3 vote, with one abstention. The full cabinet must ratify the handover on Sunday before it can take place.

Israeli-Palestinian negotiations are due to resume in Washington on Monday.

Erekat told Reuters the transfer will put nearly 43 percent of the West Bank under full or partial Palestinian control. The new transfer includes villages near the cities of Hebron, Ramallah, Jericho and Jenin.

Barak and his aides decided that three other villages located even closer to the capital than Anata — Abu Dis, A-Ram and Azariya — will not yet be transferred to Palestinian control, despite Arafat's demands.

But the Barak government has hinted unmistakably that if the peace process with the Palestinians does indeed get back on track, those villages, too, will also eventually be transferred.

These concessions have triggered vigorous opposition from all quarters, including rightist elements within Barak's coalition.

Even before Barak reversed his decision, government officials pointed out that Anata is not contiguous with the municipal borders of Jerusalem and that transferring it could not be seen as presenting the Palestinian Authority with an opportunity to encroach on the city.

But opposition spokesmen were quick to protest that Barak's concession flies in the face of his own repeated assurances that he would not support any encroachment on Jerusalem at all.

Those assurances were made in the face of a brewing storm over Abu Dis, A-Ram and Azariya — which are in effect suburbs of the capital.

The Palestinian Authority has long demanded that these villages, especially Abu Dis, be transferred to full Palestinian control. They are currently under Palestinian civilian control, with Israel controlling the overall security responsibility.

The Palestinian Authority is completing the construction of a large new building in Abu Dis that is apparently designed to serve as the seat of its future legislative assembly.

Under a never-formalized, and never officially confirmed, 1993 understanding between now-Justice Minister Yossi Beilin and Arafat's second-in-command, Abu Mazen, Abu Dis was to serve as the capital of an eventual Palestinian state.

By investing this suburb, located less than half a mile from the Old City's walls, with the status of an administrative and legislative center, the Palestinians were given the chance to satisfy, at least in the medium term, their ambition to have Jerusalem as the capital of their planned state.

Beilin said over the weekend that he "would be happy" if the Palestinians agree to make Abu Dis their capital.

The Beilin-Abu Mazen plan has always been anathema to nationalist and rightist forces in Israeli politics.

The Barak government has never openly endorsed the plan — and indeed Barak has stolidly refused to transfer the suburbs of Abu Dis, A-Ram and Azariya to full Palestinian control.

Jerusalem Mayor Ehud Olmert, a leading Likud Party member, warned this week that to cede the three suburbs would be "to invite Palestinian takeover of Jerusalem itself."

It would be the source of "endless conflict" in the future, the mayor added.

One Likud legislator who voiced support for the Abu Dis idea, Michael Eitan, was roundly criticized by party colleagues for breaking ranks and expressing a line diametrically opposed to that of the party and of the nationalist camp as a whole.

Further to the right, the Yesha Council, which represents settlers in the West Bank and Gaza Strip, blasted the government for its intention to cede Anata and the two other villages saying this would "place a noose" around the neck of the capital.

The lines are drawn for a battle over Jerusalem that could come quicker than anyone had anticipated or wanted.

It is a battle that could prove the undoing of Barak's government.

The National Religious Party, already threatening to quit the government over its plan to cede the Golan Heights as part of a peace deal with Syria, would presumably have further cause to secede if Barak goes ahead with the Abu Dis plan.

The position of another coalition member, the fervently religious Shas Party — which has been squabbling with other coalition members over domestic issues — is also uncertain.

Barak and his aides, aware of future dangers that could quickly become present disasters if the Palestinian track indeed speeds up, are putting out feelers to a number of fence-sitters in the Knesset with a view to broadening the coalition.

One such object of their overtures is the United Torah Judaism bloc, the fervently religious group that was originally part of the Barak coalition but soon dropped out.

This party, while hardline where religious issues are concerned, is believed to be pragmatic on the peace process.