JERUSALEM - The Israeli government on Friday published construction bids for 100 homes in two Jewish settlements, one of them deep in the West Bank, in violation of its pledge to freeze settlement expansion.

Palestinian officials said the new construction in the settlements of Ariel and Elkana is undermining U.S.-backed effort to reach a peace deal by the end of 2008.

Since a U.S.-hosted Mideast peace conference in November, Israel has announced several new building projects in areas of Jerusalem claimed by the Palestinians for their future state. However, Friday's announcement marks the first time the Israeli government approved construction deep in the West Bank.

An Israeli security official, speaking on condition of anonymity, said the new construction apparently is part of ongoing negotiations between the Israeli government and Jewish settler leaders. Approval for the 100 homes came in return for the recent voluntary evacuation of two small unauthorized settlement outposts by settlers, the official said.

The construction bids were published Friday in an ad by the Israeli Housing Ministry in the daily Haaretz. Housing Ministry officials were not immediately available for comment.

Palestinian negotiator Saeb Erekat said that "this undermines our efforts to make 2008 the year of peace."

As part of the U.S.-backed "road map" peace plan, Israel is to dismantle dozens of illegal settlement outposts and halt construction in veteran settlements. Under the same plan, the Palestinians are required to rein in and disarm militants. The Palestinian government in the West Bank says it's trying hard to meet its road map obligations.

Israeli Prime Minister Ehud Olmert told the Yediot Ahronot newspaper in an interview published Friday that Palestinian President Mahmoud Abbas is aware of Israel's position that it will continue to build in so-called settlement blocs. Several of those blocs are close to Israel, but Ariel and Elkana are deep inside the West Bank.

Recent Israeli construction in Jerusalem prompted Abbas to briefly call off the peace talks. The Palestinians want east Jerusalem as a future capital but Israel annexed the sector of the city to its capital after capturing it in 1967.

In other developments, Israel sealed the West Bank and Gaza for the duration of the weeklong Jewish Passover holiday which begins at sundown Saturday. Holiday closures are routine, and bar most Palestinians from entering Israel.

In a West Bank raid, Israeli forces killed a Palestinian militant leader, Hani al-Kabi, in the Balata refugee camp next to West Bank city of Nablus.

Al-Kabi had fled a Palestinian jail a month ago, violating the conditions of a deal with Israel that would have granted him amnesty. An Islamic Jihad was seriously wounded in the same raid, medics said.

The Palestinian Authority wants Israeli troops to halt such raids in areas where Palestinian security forces are seeking to establish control, particularly the Nablus area. However, the Israeli military says Palestinian forces are not doing enough yet to rein in militants.

Still, Palestinian security forces will be able to reopen 20 police stations in rural areas of the West Bank, for the first time in eight years of fighting. About 500 Palestinian police officers will deploy in West Bank villages, said Peter Lerner, an Israeli military official. Overall security control in these areas will remain in Israeli hands, but Palestinians now will have presence to maintain public order and enforce the law.

Also Friday, a Reuters photographer was injured in the leg by a rubber-coated steel pellet fired by Israeli troops trying to break up a weekly protest against the construction of Israel's separation barrier in the West Bank, witnesses said. Other protesters participating in the march near the village of Bilin suffered from tear gas inhalation, said a protest organizer, Abdullah Abu Rahma.

The Israeli military had no comment.

In the Gaza Strip, two Gaza cargo crossings remained closed Friday, following recent attacks by Palestinian militants. Israel's army promised to continue transferring vital goods into Gaza, but did not say when or how.

Israeli troops foiled an attack on the Kerem Shalom crossing on Thursday, killing one gunman. Last week, two Israeli civilians were killed in an attack on Nahal Oz, the only fuel terminal into Gaza. On Friday, militants opened fired again at Nahal Oz.

Thursday's violence followed a day of fighting between Israeli forces and Gaza militants that killed three Israeli soldiers and 21 Palestinians, including five children and a news cameraman.

Egyptian efforts to mediate a Gaza cease-fire and an Israel-Hamas prisoner swap are bogged down.

A prominent Hamas official, Mushir al-Masri, said Friday that Gilad Shalit, an Israeli soldier captured by Gaza militants two years ago, will not be released until hundreds of Palestinian prisoners are freed.

"Gilad will not see the light, will not see his mother, will not see his father, God willing, as long as our heroic prisoners do not see their families, in their houses," al-Masri said in a speech.