The Cabinet vote cleared the way for a possible three-way meeting — as early as next week — between Israeli Prime Minister Ariel Sharon, his Palestinian counterpart Mahmoud Abbas and President Bush.
"The decision ... was as difficult as crossing the Red Sea," Foreign Minister Silvan Shalom said of the vote. Those opposed, including ministers from Sharon's own Likud party, said they feared the plan endangered Israel's existence.
The vote was seen as a watershed because Sharon's government, one of the most hawkish in Israel's history, formally recognized the Palestinians' right to a state. That has been anathema to Israel's right-wing parties, including Sharon's Likud, for decades.
The Cabinet voted 12-7, with four abstentions. The vote came after six hours of passionate debate and injected new momentum into the often-delayed "road map" to Mideast peace, a three-stage plan that envisions a full Palestinian state by 2005.
It was a success for the United States, which had pressured Israel to sign on to the plan, and was expected to help counter the U.S. image in the Arab world as being one-sided in the conflict.
"This was not a simple day," Sharon said after the vote. "This was not a happy decision."
Israeli hard-liners, including most in Sharon's Likud party, believe a Palestinian state would pose a mortal danger to Israel because it would create the constant threat of terrorism and open the way to an invasion of Israel through Palestinian territory. If the plan goes into effect, Israel would also be forced to take the painful step of dismantling Jewish settlements that Likud encouraged.
However, Israel did dilute its acceptance. The vote was held on "steps defined by the road map," and not the entire document. And many disagreements remain, including who should make the first move, because of the deep distrust from 2½ years of fighting that has claimed more than 3,000 lives, two-thirds on the Palestinian side.
The Palestinians, who accepted the plan a month ago, expressed disappointment at what they said was Israel's muddled response but indicated they were ready to move ahead.
Sharon was to meet with Abbas on Tuesday — their second summit in 10 days — to work out the next steps. The Egyptian Red Sea resort of Sharm el-Sheik was seen as the likely venue for a subsequent three-way summit with Bush.
Some said Sharon's support for the plan after weeks of resistance was a tactical move aimed at deflecting U.S. pressure. He may be counting on the road map to fail because of the Palestinians' trouble getting militias to stop attacking Israelis.
However, there were some signs that Sharon, Israel's most prominent hawk and the key architect of Jewish settlement expansion in the West Bank and Gaza Strip, might have had a change of heart on solving the conflict.
"The time has come to say yes to the Americans, the time has come to divide this land between us and the Palestinians," he told the Yediot Ahronot daily.
Shimon Shiffer, the newspaper's senior political analyst known for his close contacts with Sharon, said Sunday that the prime minister told him he has changed. "He has internalized the fact that Israel cannot continue to control 3.5 million Palestinians," Shiffer said.
Former Justice Minister Yossi Beilin, who helped negotiate interim peace accords with the Palestinians in the 1990s, said that even if Sharon is not serious about the plan, the vote broke new ground in the Israeli-Palestinian conflict. "Even if it is only a tactical decision, the historical price is a very expensive one," Beilin told The Associated Press.
Despite stiff opposition from nearly half the Cabinet ministers, Sharon's four-party coalition remains intact for now. Two pro-settler factions, the National Religious Party and the National Union, said they would not quit, even though their four Cabinet ministers voted against the road map.
Among those abstaining were four Likud ministers, including Finance Minister Benjamin Netanyahu, Sharon's rival for Likud leadership and an outspoken opponent of Palestinian statehood. Three Likud ministers opposed the plan, while five ministers of the moderate Shinui party voted yes.
The wording of the Cabinet announcement on the vote created a few loopholes. By approving the "steps defined" by the plan but not the entire document, Israel can avoid problematic requirements in the future.
For example, the road map is based, in part, on an Arab peace proposal that calls on Israel to withdraw from the lands it occupied in the 1967 Mideast war — the West Bank, Gaza Strip, east Jerusalem and the Golan Heights. Israel has said it will never withdraw to the 1967 lines. By not accepting the entire road map, Israel can argue it has not approved the Arab plan.
Israel also attached more than a dozen demands for changes in the plan and said it would insist they be met in the future. Abbas said before the vote that he would not accept any alterations, a position backed by the United States — even though U.S. officials said last week the Israeli reservations would be taken into account.
Palestinian Cabinet Minister Yasser Abed Rabbo said he feared the vote was just a ploy. "The vague acceptance of the road map, including the Israeli reservations ... proves once again that the Israeli government will place obstacles and conditions in the way of implementation," he said.
In the first stage of the plan, the Palestinians are to rein in militants and get them to halt shooting and bombing attacks that have killed hundreds of Israelis.
Abbas is trying to do it by persuasion, while Israel wants him to disarm and arrest the militants. Israel says it will not meet its first obligations, including a withdrawal from Palestinian towns, until he does.
"Now the ball is in the court of the Palestinians," said Tzipi Livni, a Likud Cabinet minister. "If they succeed in eliminating terror, maybe there is a chance for the Palestinians to live in a state."
The Islamic militant group Hamas reiterated Sunday that it was opposed to the peace plan, saying it was meant to trick the militias into laying down their weapons.