``The two parties have agreed to a set of steps that constitute a very good start to improving movement and access, improving potential economic prospects for Palestinians,'' U.S. Secretary of State Condoleezza Rice told reporters in Jerusalem.

Rice -- in Israel for her second time in a month -- is trying a new peacemaking approach inaugurated at the U.S.- sponsored Annapolis conference in November. The plan is to persuade Israel to improve living conditions in the West Bank and train Palestinian security forces while the sides work out the details of a final peace agreement.

``The whole point is to have an integrated approach that looks at the security, looks at the movement and access issues, and looks at the potential for economic progress, and then comes up with concrete steps that can move all three together in an integrated fashion,'' Rice said today.

The incremental steps are part of the 2002 road map for a two-state solution sponsored by Israel and its partners. Past attempts by Rice to negotiate easier movement for the Palestinians have failed and the number of barriers to Palestinian movement has increased since the November peace summit.

Israeli Roadblocks

Today, Israel maintains hundreds of roadblocks and 63 permanent checkpoints throughout the West Bank to prevent suicide bombers and gunmen from reaching Israeli population centers.

Rice was prompted to focus on movement and access for Palestinians after hearing complaints from Tony Blair, the former British prime minister who is now a peace envoy to the region, that the barriers are hampering economic development projects he'd like to see started.

Rice said the U.S. would monitor and verify that Israel actually dismantles 50 roadblocks. Also, as part of the new agreements, 700 Palestinian police, once they've been trained, will be deployed in Jenin, a city in the northern part of the West Bank where there are few major Jewish settlements nearby.

``There is a view that Jenin is a place where a lot of progress can be made'' and can be a ``model'' for future cities, Rice said.

Palestinian Workers

The number of Palestinian construction workers permitted to work in Israel will increase by 5,000 to a total of 23,500. A new industrial park, sponsored by Turkey, will be established in Tarqumiyah, near Hebron, and an area in Jericho will be established for marketing and selling Palestinian agricultural products abroad.

The set of agreements was formally announced by Rice and Israeli Defense Minister Ehud Barak after the two met with Palestinian Prime Minister Salam Fayyad in Jerusalem.

``Some of these steps are essential for the long term but very dangerous in the short term,'' says Meir Litvak, professor of Middle East history at Tel Aviv University. ``Taking down the roadblocks is essential for the long term, but in the short term, Hamas can exploit it,'' he said, referring to the Palestinian militant group that controls the Gaza Strip and is responsible for numerous terrorist attacks against Israelis.

Dangers of Plan

``If you don't do it you undermine'' Palestinian President Mahmoud Abbas, Litvak said. ``But on the other hand if the risk is realized, and Hamas succeeds in carrying out a massive attack, then it will weaken the Israeli government.''

Abbas controls only the West Bank. His forces were ousted from Gaza by Hamas in June when it took control of the territory and ended a partnership government with his Fatah party. Rocket attacks on Israel from Gaza and Israeli military reprisals against the Palestinian militants there have impeded attempts to advance the peace process.

In parallel to the steps on the ground, Israeli Foreign Minister Tzipi Livni and former Palestinian Prime Minister Ahmed Qureia, the lead negotiators on a final peace deal, have met secretly about 50 times to iron out obstacles, and ``the end is in sight,'' the daily Yediot Ahronot said today, without citing anyone.

Rice said there was progress in those negotiations. In one potentially significant development, Livni today told reporters that Israel must soon work out the terms of compensation for any Jewish settlers willing to leave the West Bank, where some communities will have to be dismantled under any accord reached with the Palestinians.

Settler Compensation

``In principle, as someone who went through the entire process of disengagement, and the need to compensate those who were evacuated, I think it is right to work on this as early as possible,'' Livni said, referring to the 2005 evacuation of some 8,000 Jewish settlers from the Gaza Strip.

Still, Rice acknowledged that even if the terms of a final peace treaty on the thorny issues of the future of Jerusalem and borders were worked out before the end of the year, a deal would not be implemented until after the Bush administration leaves office in January 2009.

``It obviously will take some time, if you just look at all the things that will have to be done in order to implement an agreement,'' Rice said. ``Nobody is expecting that you can fully implement an agreement by the end of the year.''