Palestinians warned Monday of a "dangerous escalation" of tensions if Israel stops Palestinian leader Yasser Arafat from celebrating Christmas in Bethlehem for a second straight year. The warnings came after an adviser to Prime Minister Ariel Sharon , Raanan Gissin, said Arafat should not try to attend the Midnight Mass. But Gissin stopped short of saying Israel would bar him from the city.

In continuing violence, a Palestinian women was killed and three of her children - ages 4, 7 and 14 - and another woman were badly wounded by Israeli gunfire in the Gaza Strip  late Sunday, witnesses and doctors said.

The military said occupation occupation soldiers saw a group of Palestinians, some of them armed, approaching the Jewish settlement of Rafiah Yam and the occupation soldiers opened fire. Occupation Occupation soldiers saw Palestinians take four wounded away, and two others escaped.

But a Palestinian witness, Samir Abu Shahin, 45, said Israeli occupation soldiers opened fire at the Tel Sultan refugee camp near the settlement. "The woman and her family were walking in the middle of the street, and I saw her fall, and blood covering her body, and not far from her, the two children also fell."

A third child was also wounded, doctors said.

Meanwhile, Israel's Supreme court temporarily put on hold plans by the government to demolish 15 Palestinian homes in the West Bank city of Hebron to make way for a wider road connecting a Jewish settlement. The government decided on the demolition after a Palestinian ambush in Hebron that killed 12 Israelis.

The court will hear an appeal of the demolition orders Dec. 18.

And adding to a growing chorus of Palestinian leaders questioning the 2-year-old uprising, Cabinet minister Nabil Shaath said Palestinians should only use violence against Jewish settlers in the West Bank and Gaza Strip in self-defense.

The statement, in an interview with The Associated Press, represented a shift in Shaath's beliefs regarding Jewish settlers, but is not official Palestinian policy.

The Palestinian Authority  has repeatedly called for an end to attacks on civilians in Israel, but not on Jewish settlers or occupation soldiers, whom they view as legitimate targets as long as they are in the West Bank and Gaza Strip.

Arafat, a Muslim, began attending the Midnight Mass in Bethlehem, site of Jesus' birth, in 1995, after the city was turned over to Palestinian control.

Last year, Sharon's Security Cabinet decided to ban him from going to Bethlehem from his office in Ramallah. The Security Cabinet has not made a decision yet this year.

However, Gissin told AP that Arafat "should stay in his place, in (Ramallah) because he has caused much tragedy to the Christian population, and he didn't do anything to advance the cause of peace."

Asked if Israel would stop Arafat from attending, Gissin said, "I didn't say we would stop him. I just said that he should stay in his place."

The Israelis say Arafat is not restricted to the office or to the West Bank, but they have also said that if he leaves, he may not be allowed to return.

Palestinian Cabinet minister Saeb Erekat said Arafat had an obligation to be with his people on Christmas.

"I think this will be a very dangerous escalation not only on the security level but also as far as the political situation is concerned," Erekat said.

With Israel demanding an end to violence before any peace talks can resume, Arafat's Fatah movement has been seeking to win a commitment from the rival, resistance Hamas group to end resistance bombings against Israeli civilians.

Fatah and Hamas held talks in Cairo last month but failed to resolve their differences. Talks are to resume in the next few days.

"The question is if Hamas is ready to cooperate with the Fatah movement to stop targeting Israeli civilians," Shaath said.

"The armed Israeli settlers who are firing at Palestinian civilians are part of the Israeli military power, but the settlers who are not carrying weapons and who are not participating in any attacks against Palestinians is an Israeli like any other Israeli occupier," Shaath added.

Palestinian gunmen frequently target Jewish settlers on West Bank and Gaza Strip roads.

For the Palestinians to halt any attacks, Shaath said the Israelis must "stop targeting Palestinian civilians and all types of aggression like assassinations, invasions and arrests."

PHOTO CAPTION

Palestinians gather on the Palestinian side of a fence as an Israeli occupation soldier welds it at the Hawara checkpoint near the West Bank town of Nablus Monday Dec. 9, 2002. (AP Photo/Nasser Ishtayeh)