Vice Premier Haim Ramon on Monday appeared to scale back expectations for reaching a peace deal with the Palestinians this year, saying instead that Israel hoped the two sides would reach a declaration of principles and not necessarily a final agreement.

On a January visit to Israel and the Palestinian Authority, President George Bush said that an Israeli-Palestinian "peace agreement should happen, and can happen, by the end of this year."

Ramon told reporters the target was not a fully detailed agreement, but a document detailed enough to set out a program for establishing a Palestinian state over the course of two to three years.

He also said he thought the Gaza Strip's Hamas rulers would be deposed within a matter of months - an Israeli condition for implementing any peace deal.

Ramon said with Israel's war against Gaza militants escalating, Israel and the moderate Palestinians with whom it is engaged in peace talks needed to intensify their efforts in order to reach a declaration of principles by the end of 2008.

At a U.S.-sponsored peace conference in November, the two sides formally resumed negotiations and pledged to reach a a peace treaty resolving
all outstanding issues by that date.

Olmert and Palestinian President Mahmoud Abbas had hoped to reach a declaration of principles outlining a future peace agreement to present at the U.S. conference in Annapolis, Maryland. They failed to achieve that objective because of disputes over how detailed the document should be, instead settling for a vague expression of their desire to seek peace.

"I believe that President Bush is expecting a declaration of principles - if it will be more detailed or less detailed is less important," Ramon said in a rare meeting with the foreign press. "Nobody is expecting a detailed agreement on the first of January 2009 [and that] a Palestinian flag will be raised."

The Annapolis gathering gave Israel and the Palestinians a forum for relaunching talks after seven years of violence.

The outstanding issues the two sides are negotiating include sovereignty over disputed Jerusalem, the fate of Palestinian refugees from the war that followed Israel's creation in 1948 and final borders between Israel and a future Palestinian state.

Little progress has been made in talks since they began.

"The declaration of principles," Ramon said, "has to be detailed enough in order to implement in the years after 2008, two or three years after.

"Such a document would have to address the issue of disputed Jerusalem, but the level of detail would not have to be so great as to address what would happen in the contested Old City," he said.

"It is the same thing about refugees, about borders," he added.

Palestinian negotiator Saeb Erekat said in response to Ramon's estimation: "I don't care what we're going to call it," he said.

"What we're going to achieve with Israel in the year 2008 is an agreement that will specify how to solve all the issues," he said. "I really believe we can do it."

Israel is engaged in peace talks with Abbas' West Bank government while fighting militants in Gaza who strike Israel almost daily with rocket and mortar fire.

On Monday, Ramon reiterated his position that Israel must squeeze the Gazans economically while attacking the sources of fire, after giving
civilians there warning.

He repeatedly has stated that he opposes a broad invasion of Gaza, which Israel evacuated in 2005, though it still controls some crossings into the territory. Hamas violently seized control of the territory in June from security forces loyal to Abbas.

He also restated his position that "any Palestinians that are involved directly or indirectly in trying to kill Israeli citizens [are] a target from our point of view" - suggesting that Hamas' political leaders could be candidates for assassination.

"I believe the combination of steps against Hamas in Gaza will bring an end to the Hamas regime in Gaza," Ramon said. "It might take a few months, but the Hamas regime in Gaza will not last," he added.

Drawing a parallel between Israel's war against Hamas and the U.S. campaign against the Taliban regime in Afghanistan and the Russian war against Chechen separatists, Ramon said, "The war against terrorism is complicated and takes a long time."