Buses carried handcuffed Palestinians from an Israeli jail yesterday who were to be freed among 500 prisoners in the largest release for nearly a decade, meant to bolster peace efforts by Palestinian President Mahmoud Abbas. Further strengthening Abbas?s hand, legislators from his dominant Fatah movement approved a keenly awaited new Palestinian cabinet that puts his loyalists in key positions.

Prospects for peacemaking in the Middle East have grown since Abbas was elected to succeed Yasser Arafat on a platform of non-violence and has persuaded armed factions to follow a de facto truce. Palestinians say Abbas needs large-scale prisoner releases to get the armed groups to formalise the ceasefire he agreed with Israeli Prime Minister Ariel Sharon at a Feb. 8 summit. Some 8,000 Palestinians are held by Israel.

<B>Biggest release</B>

The freeing of 500 prisoners comes a day after Israel?s cabinet approved a plan to withdraw from the Gaza Strip, marking the first time Israel decided to dismantle settlements on land Palestinians want for a state. After pre-dawn Muslim prayers, eight buses sped out of the gates of the Ketziot jail in Israel?s Negev desert. Handcuffed prisoners smiled from the windows.

They were to be freed after 3 a.m. EST at several crossing points to the West Bank and Gaza in the biggest release since 1996, when 800 were freed. Those making the longest journey left the prison first. None of the prisoners ? the first of 900 to be freed in coming weeks ? had been found guilty of attacks that killed or wounded Israelis. Most had already served at least two-thirds of their sentences.

Mohammed Dahlan, a close Abbas adviser set to join the cabinet, said Palestinians awaited a wider release. Palestinians want those who carried out attacks on Israelis to be included in future releases. Israel has so far ruled out freeing prisoners with ?blood on their hands.? About half the prisoners to be freed yesterday are from Fatah. The rest are from Islamic factions that are still weighing whether to formally agree to the ceasefire.

Abbas?s internal position was strengthened by Fatah?s naming of key loyalists in the new cabinet, due to carry out his mandate to ensure militants are brought on board and implement reforms to the ailing Palestinian Authority. Major-General Nasser Yousef, who played a big role in a crackdown on Islamic militants in the 1990s, was named as interior minister. Former security chief Dahlan, another strongman, will also become a cabinet minister.

As Fatah has a two-thirds majority in the Palestinian Legislative Council, the government list was to be passed later yesterday. A new government list had been expected since Abbas was elected in January after Arafat?s death, but insiders said it was held up by disagreements between him and Prime Minister Ahmed Qurie. Palestinians moved a step closer on Sunday to taking full control of the occupied Gaza Strip after Sharon?s cabinet gave vital approval for a withdrawal from settlements under a plan touted as a possible springboard to peace negotiations.

Sharon gave the order for evacuations to start on July 20. But while Palestinians welcome the Gaza withdrawal, they were angry at the cabinet?s simultaneous decision to endorse a route for a barrier looping deep into the West Bank to take in major settlement blocs. Israel says the barrier is a vital security bulwark against any infiltrating Palestinian militants. Palestinians brand it a precursor to annexation of land Israel captured in a 1967 Middle East war.

Gil Cohen-Magen