JERUSALEM — Israel's blockades of Palestinian cities in the West Bank are presenting the first major challenge of Prime Minister Ariel Sharon's young tenure.

Israel defends the blockades as necessary for security reasons, citing an alleged plot by Ramallah-based militants to carry out a massive terror attack in Jerusalem.

The Palestinian Authority this week renewed a call on the U.N. Security Council to send in peacekeepers to protect the Palestinian people.

For its part, the U.S. State Department said Israel's attempts to end the violence through economic pressure only provide economic hardship and do not enhance security.

U.S. State Department spokesman Richard Boucher on Monday urged Israel to ease economic restrictions on the Palestinians, reiterating that Israel should also release tax revenues it has withheld from them.

The United States "opposes any measures that make it impossible for ordinary Palestinians to survive economically," said Boucher.

Faced with criticism from the United States and the European Union, Israel on Tuesday eased its blockade of Ramallah, opening two roads to the city. Palestinian officials, however, complained that the move was only cosmetic and was intended to deflect international criticism.

Hundreds of Palestinians took part in a "Day of Rage" demonstration Wednesday in Ramallah to protest Israel's closure of the West Bank city. The protesters briefly seized an Israeli army checkpoint, before soldiers, firing rubber bullets and tear gas at the crowd, retook the position.

On Monday, Israel's defense minister eased the blockades around four other Palestinian cities in the West Bank.

Benjamin Ben-Eliezer told Jewish settler leaders that because of a recent period of relative quiet, Israel was lifting restrictions imposed around Kalkilya, Tulkarm, Hebron and Bethlehem.

He defended the blockade around Ramallah, saying there was intelligence information that terrorists there are trying to infiltrate Israel with a car bomb.

"We have very clear indications" that terrorists are trying to get into Israel for a "very big operation," Ben-Eliezer told Israel Radio.

Israel Radio quoted senior Palestinian security forces as denying that any terrorist cell was planning such attacks from Ramallah.

Meanwhile, according to the Associated Press, the first planned ministerial-level meeting between Israel and the Palestinians since Sharon took office was canceled because Israeli security officials did not want Israel's minister for regional cooperation, Tzipi Livni, to travel to the Palestinian side of the Erez crossing between Israel and the Gaza Strip.

On Sunday night, Israel finished tightening the closure of Ramallah, cutting the city off from surrounding Palestinian towns and villages with trenches, roadblocks and tanks.

Some 1,500 Palestinians joined a protest Monday aimed at breaking the Ramallah blockade. One protester was killed during clashes with Israeli troops.

The Palestinians claimed the man was hit by live fire. The Israel Defense Force said only rubber bullets were used in the incident.

The sole fatality at the protest was later identified as a Palestinian intelligence officer. He was killed by a single shot to the chest as he was standing near the leader of Palestinian militias in the West Bank, Marwan Barghouti.

IDF officials denied Palestinian accusations that Barghouti had been the real target.

Meanwhile, Sharon defended the blockades, telling Likud officials Monday that Israeli security forces had recently arrested a number of Palestinian terrorists who planned to carry out a large-scale attack in Jerusalem.

However, several members of the cell are still at large in Ramallah, Sharon said, and Israel had to do what is necessary to thwart an attack.

Sharon said the Palestinians are responsible for the closure on Ramallah, according to the Jerusalem Post.

"If they really wanted to make things easier for their citizens, they would simply deal with the network of terror, as they obligated themselves to do in all agreements they signed to date," Sharon said.

Sharon said he opposes collective punishment against the Palestinian population, which prompted him to lift the closures in areas that have been relatively quiet.