Israel's plan to expand housing in the West Bank is expected to dominate a meeting of the country's Prime Minister and the US Mideast envoy.

U.S. envoy Elliot Abrams will meet with Ariel Sharon in Jerusalem on Thursday.

Front and centre will be the plan, announced by Israeli officials, to build thousands of more housing units in the West Bank settlement of Maaleh Adumin.

Inside a busy mall in the centre of Maaleh Adumim, local residents expressed strong support for the plan.

"I think it's great," Yitzhak Klein, 47, told The Associated Press.

"It shows that Jewish settlement in Israel is expanding."

Right now, the area has 31,000 residents. The plan would double it in size and link it with Jerusalem, six kilometres away.

The goal is to apparently address Israeli demographic concerns about Jerusalem, where Arab growth rate is significantly higher than the Jewish birth rate.

Maaleh Adumin's mayor, Benny Kashriel, said about 480 new units have already been built and thousands more are on the way.

"Within about six months the planning work in the Housing Ministry will be complete and then we will be able to present the construction plans for the city to the Defense Minister for approval," Kashriel also told the Israeli newspaper Maariv.

In Ramallah, the news brought swift reaction from the Palestinian Prime Minister Ahmed Qureia.

He appealed for "a firm and clear position" from Washington against Israeli settlement activity and for allowing armed police to patrol Palestinian towns and cities.

Jewish settlements in the West Bank and Gaza are on land Palestinians hope to include in a future state.

The United States publicly condemned a smaller plan to expand Maaleh Adumim earlier this week.

At the time, Israel assured the United States it would stick to the terms of last year's peace plan.

That plan calls for halting settlement expansion and dismantling unauthorized outposts.

U.S. officials said Washington opposes all settlement construction.

However Israeli officials say they feel their expansion plan is in keeping with the policies of U.S. President George Bush.

Speaking to AP on condition of anonymity, the officials believe the plan fits with Bush's acknowledgment that large settlement blocs will remain in Israeli control under a final peace deal.

Meanwhile, Israeli troops left the Gaza Strip town of Beit Hanoun.

They had been there for six weeks conducting an operation to clear areas used as launching pads for rocket attacks against Israeli towns and settlements.

One military official said, however, the troops will redeploy around the town.

Israel raided Beit Hanoun last month after rockets killed two people in the Israeli town of Sderot.

The deaths were the first by rocket fire since Israeli-Palestinian fighting erupted nearly four years ago.