Shortly after Sharon spoke, Israel Defense Minister Benjamin Ben-Eliezer issued a directive to stop firing on Palestinians, adding that Israeli troops should only open fire "when lives are endangered."

However, Israeli tanks crossed the border into Gaza in three locations Wednesday morning, and also fired mortar rounds at a Gaza police post. Israeli officials said the army was returning Palestinian gunfire, and that the tanks were clearing areas where Israel wants to build a security fence.

But Ahmed Abdel Rahman, an aide to Palestinian leader Yasser Arafat, told the Associated Press that the Palestinians "reject everything Sharon said about a cease-fire."

Other Palestinian officials said there would be no cease-fire until Israel stops building homes in West Bank and Gaza settlements.

Meanwhile, William Burns, the U.S. ambassador to Jordan, is returning to Jordan with a special assignment to become directly involved in talks with the Israelis and Palestinians. His appointment by Secretary of State Colin Powell represents a major initiative for the Bush administration, which had hoped to avoid such direct involvement for months to come.

The president personally got involved Wednesday morning by making separate phone calls to both Sharon and Arafat urging them to stop the violence.

The sudden flurry of U.S. diplomacy comes a week after some of the worse violence to hit the Mideast since the new intifada began eight months ago.

Last Friday, a suicide bomber killed himself and five Israelis in a shopping mall in the Mediterranean coastal city of Netanya. Sixty people were injured in the pre-Shabbat blast.

Hamas claimed responsibility, saying the attack was launched to avenge Israel's killing last week of five paramilitary Palestinian policemen near Ramallah, and the murder of a 4-month-old Palestinian infant earlier this month by shelling in Gaza.

Within hours of the Netanya attack, Israel retaliated, sending warplanes to hit targets in the West Bank and Gaza. Twelve Palestinians were killed in the first bombing of the area since the 1967 war.

Israel continued the bombing throughout the weekend.

On Monday, world leaders attacked Israel's increased use of force, while Arab foreign ministers suggested all diplomatic contact between Arab states and Israel be halted until a cease-fire occurs.

Meanwhile, the United States on Monday released the fact-finding report written by a commission President Clinton appointed to suggest a solution to the Mideast crisis. Chaired by former Sen. George Mitchell, the report called on Palestinians to jail terrorists, and urged Israel to stop expanding settlements in the West Bank and Gaza.

U.S. Jewish leaders applauded the report and the appointment of Burns to handle Mideast negotiations. But the Jewish leaders were divided on whether Israel should be pushed to freeze settlements.

"The violence will end immediately if Arafat and the Palestinian Authority want it to end," said Malcolm Hoenlein, executive vice chairman of the Conference of Presidents of Major American Jewish Organizations. "This is a time for the U.S. to stand clearly with Israel as it confronts this serious challenge. We cannot resort to a situation whereby Arafat's refusal to take the necessary steps results in the onus placed on Israel to make yet further concessions."

Americans for Peace Now came out in support of the Mitchell report Monday, including the call for a settlement freeze. The organization and its Israeli partner, Peace Now, earlier this week criticized what they said were 15 new settlements built in the West Bank since Sharon's election in February.

"This new explosion of settlement growth exacerbates an already tense situation on the ground," said Mark Rosenblum, Americans for Peace Now founder and policy director.

Abraham Foxman, national director of the Anti-Defamation League, also supported the Mitchell report, adding, "Settlements have always been policy that American governments have been opposed to."

Dore Gold, a foreign affairs adviser to Israeli Prime Minister Ariel Sharon and former ambassador to the United Nations, said in New York on Tuesday that presenting a settlement freeze as a confidence-building measure after violence ends would signal to Arafat that violence pays.

"A settlement freeze is an attempt to gain through violence what Arafat was unable to achieve through the Oslo peace process," Gold told the Conference of Presidents.

On Tuesday, however, Ben-Eliezer — who must approve all settlement construction — told the Israeli daily Ha'aretz that absolutely no new settlement construction has gone on under the Sharon government.

In calling for the cease-fire Tuesday, Sharon suggested that after a cooling-off period, the two sides could begin implementing the Mitchell commission report.

He appeared to make a limited concession to Palestinian demands on settlements.

"We certainly see no need to expropriate lands for the settlements," Sharon said. "There is enough land. In connection with that subject, I see no problem."

Against the backdrop of the past week's violence, thousands of Israelis flocked to Jerusalem on Monday for the annual Jerusalem Day commemorations, marking Israel's reunification of the city 34 years ago.

At the central ceremony on Ammunition Hill, the site of fierce fighting between Israeli and Jordanian troops in 1967, Sharon reiterated his support for maintaining a united Jerusalem under Israeli sovereignty in a future political agreement with the Palestinians.

"If we persevere and show determination, we will reach a political arrangement in which there will be the peace we all want and are committed to, as well as security," the premier said. "It will be peace with Jerusalem, the capital of the Jewish people for 3,000 years and the capital of Israel, with the Temple Mount, the heart of the Jewish people, in its center, united and undivided forever."