Israel could hand back the strategic plateau seized from Syria in the 1967 Middle East war as part of an eventual peace deal with Damascus, the chief of the general staff told the Yediot Aharonot daily.

"From the point of view of military requirements we could reach an agreement with Syria by giving up the Golan."

"The army could defend Israel's borders wherever they are, if the political authority makes the decision" to withdraw from the Golan, he said.

A senior official close to Prime Minister Ariel Sharon made it clear however that such a decision was not imminent.

"We will only negotiate with Syria if it first gives up its support for terrorist acts against Israel and makes no preconditions about the nature of a final agreement," he said.

Israel accuses Syria of supporting radical Palestinian groups such as Hamas and Lebanon's Hezbollah movement, whose militia clashes sporadically with Israeli troops over a disputed border region.

Sharon himself has frequently voiced opposition to giving up the Golan Heights, which Israel annexed in 1981 and has peopled with Jewish settlements alongside the original Druze inhabitants who refuse to accept Israeli citizenship.

In the last talks between the two sides which broke down in January 2000 Israel's then Labour government offered to give up the territory captured in 1967 except for a strip on the shores of the Sea of Galilee.

Syria's refusal to accept the deal meant the offer lapsed, in the opinion of Sharon's right-wing government, which is against giving Damascus any control over Israel's main source of fresh water.

Syria says it should recover everything it lost as far as the ceasefire lines that ended the conflict with Israel's neighbours in the wake of the creation of the Jewish state in 1948.

But Syrian President Bashar al-Assad, in a December 2003 interview with the New York Times, again raised the possibility of resuming talks with Israel to exchange the Golan for peace and normal relations between the two countries.

Right-wing Israelis also poured scorn on Yaalon's suggestion, even though the general stressed it was only "theoretical" and depended on a "balanced" agreement with Syria.

National Religious Party leader and former minister Effi Eytan told Israeli public radio: "These statements are signs of a veritable mental illness, which makes officials express daily their intention of giving away parts of Israel."

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