JERUSALEM — After two decades of advocating a negotiated settlement with the Palestinians, Peace Now is admitting for the first time that the strategy taken during the Oslo process was mistaken.

Its new approach: Withdraw from the settlements now, negotiate a settlement on the basis of the Clinton plan later. To that effect, the organization is set to begin a new campaign later this week, advocating a unilateral withdrawal from the Gaza Strip and the most isolated of the West Bank settlements.

"We recognize that there were mistakes made during the Oslo process," Peace Now spokesman Didi Remez said.

"The population of the settlements has doubled; we are not any closer to peace, and we are still stuck in Gaza."

Remez said only a radical step like a unilateral withdrawal would convince the Palestinian Authority that Israel is serious about ending the occupation.

But he said the main beneficiaries of such a step would be ordinary Israelis, whose security would improve once the least defensible settlements are dismantled.

The campaign was set to kick off yesterday with an event featuring Meretz Party Chairman Yossi Sarid and singer Noa at Tel Aviv's Kikar Paris.

The organization is planning rallies and political events under the slogan, "Leave the settlements, return to ourselves," leading up to a rally in June, on the 35th anniversary of the Six-Day War and the 20th year since the Lebanon War.

Remez said Peace Now decided to return to the streets a year into Prime Minister Ariel Sharon's tenure because it believes he has become vulnerable as a result of the continuing violence and poor economy.

Rather than campaign for peace now, when peace appears more distant than ever, the organization wants to shift the focus to the Gaza Strip, so that it can appeal to a majority of the public that opposes remaining in ideological settlements.

National Union Knesset member Zvi Hendel, who has lived in Gaza for 20 years, said he is worried Peace Now's campaign will succeed in "weakening the national spirit," as it did prior to the unilateral withdrawal from Lebanon. Hendel said the Lebanon withdrawal inspired Palestinian Authority Chairman Yasser Arafat to begin the intifada.

"When Arafat saw that a few shots and a little war caused the left to pressure the government to leave unilaterally, he had no incentive to accept the far-reaching concessions [former prime minister Ehud] Barak offered him at Camp David," Hendel said.

"He saw he could get all of Judea, Samaria and Gaza without agreeing to end the conflict."

Hendel warned the left not to play into Arafat's hands again and give him a reason to ignore international pressure.

He said after his warnings against creating a Palestinian army were justified by months of violence, he hopes his warnings about creating a Palestinian state will not go unheeded.

"Any fool can see that Oslo was a big mistake," Hendel said. "Now we just have to make sure that we don't make a second big mistake."