Associated Press Egyptian students flash the V-sign and hold a poster of Palestinian leader Yasser Arafat with the slogan, "Millions are willing to die for Jerusalem," above his head during an anti-Israel demonstration inside Zagazig University, north of Cairo, on Monday.

RAMALLAH, West Bank - Israeli soldiers and elite forces yesterday captured Marwan Barghouti, a close aide to Palestinian leader Yasser Arafat and a leader of a group that has claimed responsibility for dozens of attacks against Israel, including suicide bombings.

The detention came on a day of both fighting and diplomacy, with Secretary of State Colin Powell shuttling among Mideast capitals, Palestinian medics retrieving bodies from the devastated Jenin refugee camp, and Israeli troops exchanging fire with armed Palestinians holed up in Bethlehem's besieged Church of the Nativity compound.

In an interview with CNN, Israeli Prime Minister Ariel Sharon said yesterday that troops will be out of all West Bank cities except Ramallah and Bethlehem within a week.

"Altogether, we are on our way out," Sharon said. Israel, he said, has no intention to stay in "cities of terror."

Israeli troops also entered Abide and Deir Salah, two Palestinian villages near Bethlehem, as part of the 17-day-old military offensive in the West Bank, despite repeated U.S. calls for an end to such incursions, and doctors said two Palestinians were killed in Israeli raids.

Barghouti, 41, was detained at the house of Fatah official Ziad Abu Ain, who also was picked up in Ramallah, Palestinian West Bank security chief Jibril Rajoub told The Associated Press. He warned against harming Barghouti.

"Killing or humiliating him will bring catastrophes for Israel and will expand the circle of violence," he said.

Raanan Gissin, spokesman for Sharon, confirmed Barghouti's detention with cousin and aide Ahmed Barghouti.

Barghouti, sometimes mentioned as a possible successor to Arafat, is a leading figure - some say the leader - in the Al Aqsa Martyrs Brigade. The militia has claimed responsibility for dozens of shooting attacks against Israelis and, in recent months, has begun staging suicide bombings as well.

The Israeli army said a force of infantry, armored corps and elite soldiers surrounded a house in northern Ramallah and ordered those inside to come out. After most of the occupants left the house, the elite force went in and arrested Marwan Barghouti. He and Ahmed Barghouti were passed on to security forces for interrogation, the army said in a statement.

According to Israel Radio, Barghouti initially told the soldiers in Hebrew, "I know you've come for me" - but refused to come out of the building. The army then sent "an elite unit," and Barghouti agreed to come out without a fight, the radio said.

Seeking a solution to the crisis, Powell said yesterday he is holding talks with Arab and Israeli leaders about an Israeli proposal for an international Mideast peace conference that might not include Arafat.

On returning to Israel from Lebanon and Syria, Powell said the United States would not hold such a conference and that Arafat could send a high-level Palestinian official to represent him at such a meeting that would begin at the foreign minister level.

"We've got to move quickly to a political track, and there are many ways to do that and one way is a regional or international conference," Powell told reporters.

In Bethlehem, meanwhile, Israeli troops exchanged fire with armed Palestinians holed up in the Church of the Nativity compound, built over the grotto where tradition says Jesus was born.

Later yesterday, two Palestinian policemen - one seriously wounded and the other reportedly suffering a nervous breakdown - surrendered to Israeli troops ringing the Bethlehem shrine, witnesses said. The pair became the first of more than 200 armed Palestinians to give themselves up in the 12-day standoff.

Pope John Paul II called Father Ibrahim Faltas, who is in charge of the Church of the Nativity, yesterday, Faltas said. He told The Associated Press that the call was "a message from the pope to support and encourage us," and the pope "thanked us for our deep steadfastness and courage during this crisis."

In Jenin, ambulances drove along the alleys of the refugee camp, which has been the scene of the deadliest fighting in the offensive. Israel and the Palestinians have argued over who will retrieve the bodies - part of their bitter dispute over what happened in the weeklong battle.

On Sunday, the Israeli Supreme Court rejected an army plan to bury most of the bodies from the camp in an Israeli cemetery, and insisted the Red Cross monitor the gathering of the corpses.

Palestinians have charged that hundreds of people were killed in the camp, including many civilians, while Israel said about 100 died, most of them gunmen.

Palestinian medical officials said troops were making the work of the medic crews more difficult by stopping ambulances repeatedly for searches and ID checks.

Fadi Jarar, a medic for the Palestinian Red Crescent, said his crew discovered one body under a collapsed three-story building. "We couldn't pull it out because we were afraid the rubble would collapse on us," Jarar said.

Israel Radio said 14 more bodies were found yesterday in the Jenin camp, but only seven were removed because some camp areas remain booby-trapped.

Medics in surgical masks, latex gloves and white uniforms placed gallon containers of drinking water in the streets, and residents took them into their homes.

Dr. Tim Keenan, who headed one of the Red Cross teams, said water and electricity to the local hospital had been restored. He said his first priority was to look for wounded people. Before the search began, the medics and ambulances were thoroughly searched by Israel troops, Keenan said.

An official with UNRWA, the U.N. agency that aids refugees, said the Israeli military prevented a delivery of 20 tons of food to the camp. He said workers managed to drop off a few dozen packets of bread and water.

The Israeli military said UNRWA failed to coordinate with the military, which held up the convoy for one hour. Because there was still fighting going on in the area UNRWA wanted to enter, the convoy was directed to a different section, the military said.

On Sunday, Sharon called for a peace conference led by the United States. Sharon told a meeting of business leaders that he brought up the idea in a meeting with Powell, and "this idea is acceptable to the United States."

Sharon proposed that Israel, Egypt, Saudi Arabia, Jordan, Morocco and Palestinian representatives take part. Sharon envisions a conference without Arafat, whom he has branded a terrorist, his advisers said.

"It's really possible" to have a conference without Arafat, said Israeli Justice Minister Meir Sheetrit. "Arafat is no longer the head of a state or someone who wants to be the head of state, he's the head of a terror organization."

Arafat expressed conditional acceptance of the idea. In a phone call to Fox News, he said, "I am ready for immediate conference, but at the same time immediate withdrawal of Israeli forces." He did not address Sharon's demand that he be excluded from such a conference. Yesterday, Powell took soundings in Syria and Lebanon on a peace conference and warned leaders of the two nations that guerrilla attacks on Israel could spill over into a wider conflict.

Powell said in Damascus that he wanted Syrian President Bashar Assad's assessment on "a way forward to negotiations" to settle the Arab-Israeli conflict.

Israel's Security Cabinet, meanwhile, approved the creation of a "buffer zone" in the West Bank that is intended to make it harder for Palestinian militants to infiltrate Israel. Fences and other barriers are to be erected along parts of the buffer zone, including in the Jerusalem area.

Cabinet Secretary Gideon Saar emphasized that Israel was not erecting a border unilaterally. "We are not talking about a continuous fence, but about different types of obstacles at different places," said Saar.

He said National Security Council head Uzi Dayan proposed blocking roads between the West Bank and Israel and authorizing a few crossing points for goods.

The cease-fire line between Israel and the West Bank has never been fortified, as Israeli governments do not recognize it as a border. Lack of a fence means that Palestinians can easily cross into Israel. Thousands enter illegally every day, looking for work, and so do suicide bombers and other attackers.