The U.S. administration will demand that Israel and the Palestinians address the issue of borders as the first step in the Middle East peace plan, senior Palestinian officials said Thursday.

Defense Minister Ehud Barak said Wednesday that Washington will present its new plan for a comprehensive Middle East peace soon.

The Americans will also outline proposals for an Israeli peace with Syria and Lebanon, the Palestinian officials said Thursday.

The American plan will not specify step-by-step actions for an Israeli-Palestinian solution, but will address final status issues - borders, Jerusalem and refugees.

The Americans will set a timetable of about a year and a half for the negotiations and demand the sides first solve the border issue, under the belief that this will lead to solutions for other issues, such as the settlements and water. After that the sides will discuss the other fundamental issues - Jerusalem and the refugees.

The negotiations between the Israelis and the Palestinians probably will be conducted in the presence of American officials, the sources said. The American administration is likely to present its plan before or during the UN General Assembly set for September.

Saeb Erekat, head of the PLO's negotiating team, denied knowledge of the plan.

Erekat said that George Mitchell, the special White House envoy to the Middle East, said in recent meetings that the administration needs several more rounds of talks to draft a peace plan.

Mitchell is supposed to meet Prime Minister Benjamin Netanyahu again within the next two weeks.

During this period the Americans hope to reach understandings about the settlements, which would enable talks to resume.

PA chairman Mahmoud Abbas is refusing to resume talks before Israel halts construction in the settlements. However, once Washington reaches understandings with Israel to suspend construction, Abbas would not be able to maintain his refusal, the Palestinian officials said.

The debating continued Thursday at Fatah's sixth convention, which is due to end today after delegates elect leaders for the movement's institutions. It is not clear whether Fatah's delegates from Gaza will take part in the vote remotely, since Hamas has refused to let them attend.

Tension between Mohammed Dahlan and Fatah's old leadership flared up again after Dahlan's associates accused the old guard of appointing cronies as delegates to prevent the middle generation from being elected.

Dahlan threatened to have his supporters boycott the vote unless a solution is found for the Gaza delegates.

Commentators said yesterday that Fatah is unlikely to undergo dramatic leadership changes. Marwan Barghouti and Jibril Rajoub, of the middle generation, are considered to have relatively high chances of being elected to the central committee.