Associated Press Palestinians look through the rubble of destroyed houses in the center of the West Bank town of Nablus yesterday. Residents came out onto the streets to survey damage for the first time in almost three weeks, after Israel pulled its troops out of Nablus early Sunday, scaling back its campaign against militant groups held responsible for attack against Israelis.

JENIN, West Bank - With Israeli forces gone from most Palestinian cities in the West Bank, Prime Minister Ariel Sharon declared yesterday that Israel has completed the latest stage of its "war on terrorism" and will turn to new tactics as it presses the campaign.

Israel withdrew troops from Nablus, the largest Palestinian city in the West Bank, and most of Ramallah, the Palestinian headquarters in the territory. But soldiers remained at two sensitive and volatile sites - Yasser Arafat's compound in Ramallah and the Church of the Nativity in Bethlehem, where armed Palestinians are holed up inside.

The Israeli army also said its forces remain in several villages near Jenin, though Israeli forces left Jenin city and the neighboring refugee camp Friday, the scene of the heaviest fighting in three weeks of Israeli incursions aimed at the West Bank.

Sharon called the operation - which Israel says has been aimed at militant groups held responsible for attacks that have killed some 470 Israelis in 19 months of fighting - a success.

"I believe we have achieved very notable accomplishments," Sharon said. "However, the war against terrorism continues and will continue. But now it will employ a different method."

Sharon gave no details, but he has spoken previously about creating a buffer zone that would make it more difficult for Palestinians in the West Bank to reach Israeli cities and towns. Israel already has an extensive network of checkpoints that keeps most Palestinians out.

The withdrawal from Nablus and Ramallah was a significant scaling back of the Israeli campaign. However, Palestinians are demanding a complete Israeli troop withdrawal from the West Bank before they will consider a cease-fire deal.

Secretary of State Colin Powell, who tried but failed to negotiate a truce during a Mideast visit last week, said Israel should loosen its confinement of Arafat to give him a better chance of exercising his authority.

"I think the more access he is given, the opportunity he is given to show whether or not he can control forces or bring this security situation under control," Powell said in Washington on NBC's "Meet the Press."

Israel says it will maintain its siege of Arafat's headquarters until he surrenders four men wanted for the killing last October of Tourism Minister Rehavam Zeevi and the man accused of arranging a weapons shipment to militant groups.

Arafat's aides have said the suspects are in custody in the compound and will be tried by the Palestinian Authority.

In a related development, six pro-Palestinian activists from European countries slipped past the Israeli security cordon and entered Arafat's offices yesterday, joining about 25 other foreign activists who have been inside for the past three weeks.

Powell said the United States and other countries were trying to bridge the differences between Israel and Palestinians over the suspects.

He also said he was pleased that Israel's withdrawal of forces from Nablus and Jenin and sections of Ramallah "seems to be well under way" but would like to see it continue "until there is no more question about it."

"We are moving in a good direction right now but it is not yet over," Powell said.

With Israel's West Bank offensive coming under international criticism, Sharon announced last week that Israeli troops would be out of all Palestinian population centers by now, except for Arafat's compound and the Bethlehem church.

However, Israel still has troops in many parts of Bethlehem, not just around the church. Israel said a pullout from other parts of the biblical city would leave exposed the troops surrounding the church.

Conditions were worsening for those inside, said one of the priests.

"There is no food left in the church now for the Palestinians or the monks and nuns," said Rev. Ibrahim Faltas, a Franciscan priest. Electricity was intermittent and there was no running water, he said. More than 250 people, including clerics, are in the compound.

In Jenin's refugee camp, meanwhile, Norwegian and British aid workers picked through debris, probing collapsed houses with tiny cameras looking for unexploded ordnance or signs of survivors.

The urgency of the mission was underscored when two children, both about 10 years old, were wounded by an explosive they may have picked up from the ruins.

The search and rescue mission "is going to be keeping us busy for some time," said Bard Strand, of the Norwegian People's Aid.

Jenin hospital officials said 45 bodies have been recovered, and more were likely to be found when the layers of concrete are removed.

The heavy fighting in the camp lasted eight days, ending April 11.

The Israeli army says about 50 Palestinians were killed, most of them militants. The Palestinians claim hundreds were killed, many of them civilians, though the search through the camp is going slowly and few bodies have been found in recent days.

Israel lost 23 soldiers in the Jenin campaign.

Barry Sessions, of the British organization RAPID UK, said rescuers were reaching the end of the period when survivors could still be found. "It's a possibility we haven't ruled out," he said.

The liberal Israeli daily, Haaretz, said in an editorial that "Israel must make every effort to ease the suffering of many of the camps' residents and help bring life back to its normal routine."

In other developments yesterday, the Israeli military said it arrested a leader of the Tanzim militia and 12 other Palestinians after a brief gun battle in the Qalandiya refugee camp outside Ramallah.

Army authorities said Nasser Abu Hmeid, 31, was responsible for training fighters of Tanzim, the military wing of Arafat's Fatah movement, and was the right-hand man for Marwan Barghouti, the Tanzim leader who was arrested April 16. Hmeid was involved in several shootings and bombings against Israelis, the army said.

The army's withdrawal from Nablus was largely completed before dawn yesterday, and some residents rushed to check apartments that had been taken over by Israeli soldiers in recent weeks.

The army spokesman said troops would remain on the outskirts of the cities, and suggested that further incursions were possible if Palestinian militants carried out more attacks against Israelis.

Ghasoub Abu Ghoush, who had moved in with a downstairs neighbor when soldiers took over his Nablus apartment, gestured to an empty drawer he said had contained gold jewelry. Empty cases and only a couple of pieces were lying inside.

Furniture had been pushed to the sides of rooms. Abu Ghoush said that up to 30 soldiers had been staying in his apartment. Most doors in the building were dented, their locks broken, and sewage covered the floor of one home.

In Ramallah, the departing tanks and soldiers left buildings and roads heavily damaged, street lighting knocked out, stores in ruins and cars crushed on the roadside.

Tayseer Al-Juba, 30, exploring the devastated scene, said he felt lucky "to be getting out of this terrible situation alive. Now we can make sure our relatives and our beloved are fine. God have mercy on the martyrs and help their families be patient."

Asked if he thought a peace with Israel was now possible, the embittered shop owner said it was unlikely. "We have rivers of blood running between us."