Sharon said some settlements would be relocated
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The United States has warned Israel against taking any unilateral measures to separate itself from Palestinians in the West Bank and Gaza.
Israeli Prime Minister Ariel Sharon had outlined a "disengagement plan" in case the roadmap peace plan failed.
But the White House said the US was committed to a negotiated settlement between the two sides under the American-backed roadmap.
Palestinians and Jewish settlers have denounced Mr Sharon's proposed steps.
The United States "would oppose any unilateral steps that block the road towards negotiations under the roadmap that leads to the two-state vision," said White House spokesman Scott McClellan.
"A settlement must be negotiated and we would oppose any Israeli effort to impose a settlement," he said.
The BBC's Rob Watson in Washington says the fact that this White House has close relations with Mr Sharon makes this criticism all the more striking.
Disengagement
In a long-awaited speech on Thursday evening, Mr Sharon said Israel would take the initiative if the Palestinians did not begin disbanding militant groups as required by the roadmap plan.
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SETTLEMENTS FACTS
400,000 settlers in the East Jerusalem, West Bank and Gaza
130 settlements authorised by Israeli Governments
Approximately 100 un-authorised settlements, 60 built during Ariel Sharon's government
Israel spends about $500m on settlements annually - excluding security
Sources: Peace Now and Haaretz newspaper
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"If in a few months the Palestinians still continue to disregard their part in implementing the roadmap, then Israel will initiate the unilateral security step of disengagement from the Palestinians," he told a security conference in Herzliyah, near Tel Aviv.
Mr Sharon said Israel "will greatly accelerate" building a controversial barrier in the West Bank, which Israel says is vital to stop Palestinian militants crossing into Israel to carry out attacks.
He said the erection of the barrier would enable Israel to remove roadblocks in Palestinian areas and "ease the daily lives of the Palestinian population not involved in terror".
In a major policy shift, Mr Sharon said some Jewish settlements would be evacuated, although he did not identify which ones.
"The relocation of settlements will be made first and foremost in order to draw the most efficient security line possible, thereby creating this disengagement between Israel and the Palestinians," he said.
Palestinian rejection
Palestinians condemned Mr Sharon's speech as unacceptable.
Guide to the route and structure of the West Bank barrier
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"I am disappointed that he is threatening the Palestinians," said Palestinian Prime Minister Ahmed Qurei.
"We are committed to the roadmap," he added.
Nabil Abu Rudeina, an advisor to Palestinian leader Yasser Arafat, said Mr Sharon was trying to tear up the roadmap.
"These declarations represent nothing new and amount to a rejection of the roadmap.
"The alternative proposed by Sharon is inapplicable," he said.
Sheikh Ahmed Yassin, the spiritual leader of the Islamic militant group Hamas, called Mr Sharon's plan "a delusion to fool the world".
"Sharon is asking Palestinians to raise white flags, to surrender. This is totally rejected by our people. We will not surrender and our people will defend themselves," he said.
Settler anger
Jewish settlers, once a bedrock of support for Mr Sharon, were just as opposed to the prime minister's plan as the Palestinians.
Settler spokesman Yehoshua Mor-Yosef said the proposals "will escalate terror".
"The dismantling of settlements and expulsion of Jews from their homes will only increase the appetite of the murderer," he said.
Effie Eitam, leader of the pro-settler National Religious Party, which commands six seats in the coalition, threatened to quit the government.
However, the BBC's Jill McGivering in Jerusalem says some critics of Mr Sharon's plan have taken comfort in his lack of detail, saying they doubt the measures will really be implemented.
She points out that Mr Sharon has not set out any specific timetable, just an ultimatum of a few months.