Israeli bulldozers, backed by armed troops, have destroyed five homes in an Israeli-controlled section of the West Bank.

The Israeli military said the houses were demolished because they had been built without construction permits.

Israeli human rights groups say few building applications are ever granted. That forces Palestinians to build without approval.

The houses razed Wednesday in the village of Deirat, south of Hebron, were home to 38 adults and children. 65-year-old Abed Abu Aram said it was the second time his home has been knocked down, but he had no intention of leaving.

He said: "We are staying, even if we have to live in a cave or a tent."

Meanwhile, Senior Palestinian negotiator Saeb Erekat warned on Wednesday that failure to reach a peace deal with Israel this year could lead to a collapse of the moderate Palestinian Authority.

"If we fail to produce an agreement in 2008... we may disappear," Erekat said.

"The impact will not be limited to Israel and the Palestinians. Watch the region," he warned.

Israel and the Palestinians, led by President Mahmoud Abbas, last November relaunched the Middle East peace talks at an international conference in the United States after a seven-year hiatus.

Although both Abbas and Israeli Prime Minister Ehud Olmert have expressed their desire to ink a deal by the end of 2008, talks have so far made little headway.

Abbas said after meeting Slovenia's Foreign Minister Dimitrij Rupel in the West Bank town of Ramallah that peace talks were the only option for the Palestinians.

"We don't have any other options but to negotiate. Time is short and we must reach a result before the end of the year," he said.

Erekat declined to say whether the Hamas movement could rout Abbas in the West Bank, but conceded the popularity of Abbas has declined sharply while support for the Islamists has risen.

"People are angry with us... their pessimism and anger is because of our inability to deliver," he said, referring to a recent poll.