Israeli soldiers killed a Palestinian bystander in a sweep for militants Thursday, witnesses said, a day after Israel announced it would ease West Bank blockades to boost Palestinian Prime Minister Ahmed Qurie.

Emtiaz Abu Ras, 38, was shot as she peered from a window of her house at troops who pursued and opened fire at a Palestinian in an alley in the West Bank city of Nablus, witnesses said.

An Israeli military source said soldiers carrying out an operation against "terrorist infrastructure" in the area ran into heavy gunfire from numerous locations and shot back but did not see if anyone was hit.

The Israeli army said Wednesday its armored forces would reduce their presence in and around West Bank cities except for Nablus and Jenin, bastions of Islamist militants. But there was no intention to remove a network of checkpoints and roadblocks.

Army chief Moshe Yaalon jarred Israeli leaders last week by saying clampdowns drive Palestinians toward militancy and undermine Qurie, who wants peace talks but is locked in a power struggle with Yasser Arafat (news - web sites) delaying creation of a new cabinet.

The Palestinian president and Qurie are divided over the appointment of an interior minister and delegation of security powers key to any efforts to end three years of violence and revive a stalled U.S.-backed "road map" to peace.

Despite the army's announcement, Palestinians reported no easing of edicts that have largely trapped them in their towns and crippled their economy. Israel says the measures are needed to stop suicide bombers reaching its cities.

The army also gave no timetable for relaxing the restrictions and said it would continue to raid Palestinian areas if necessary.

Security sources said Defense Minister Shaul Mofaz had also decided in principle to remove 10-20 Jewish settlement outposts on occupied West Bank land.

"The point of these steps is both to help Qurie consolidate his position vis-a-vis Arafat and the militants and satisfy the Americans who have been very critical of outposts," a senior Israeli security source said.

Arafat converted Qurie's eight-member "emergency" cabinet into a caretaker government Tuesday, hours before its 30-day term expired, allowing more time to resolve the dispute.

The United States and Israel want to sideline Arafat, saying the former guerrilla leader incites violence. He denies the charge.

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