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Israeli troops trained this week for a possible all-out West Bank war with Palestinians that could involve Palestinian fighters storming Jewish settlements, Israel Radio said Friday.

"There can be no doubt the Israel Defense Forces are preparing for the worst," the state-owned radio said.

The report came as Prime Minister Benjamin Netanyahu rejected a renewed U.S. call for a freeze on Jewish settlement expansion, saying his "prudent" policy promoted only natural growth.

Middle East peace moves have been in crisis for six months over the building of Israeli settlements in the West Bank, home to more than a million Arabs, and over Palestinian suicide attacks that have killed 20.

The radio said soldiers training for the "possibility of war in the territories" acted out such scenarios as a Palestinian takeover of Jewish settlements and an Israeli return to Palestinian areas that have been given self-rule under peace deals starting in 1993.

"The Israel Defense Forces do not elaborate on exercises and preparations for a time of emergency," the army told Reuters when asked about the radio report.

A senior Palestinian security official said Israeli forces had trained with helicopters, tanks and troops near 21 settlements around Jenin in the West Bank.

Rejecting the U.S. call for a settlement freeze, Netanyahu told reporters: "You don't see anyone suggesting that construction be stopped in the Arab communities which have natural growth as well, and no one would realistically suggest freezing life."

Netanyahu surprised Secretary of State Madeleine K. Albright this week by announcing that he would build 300 more homes in the West Bank settlement of Efrat, despite her recent call for a "timeout" in such settlement construction. "I am calling on the prime minister to honor the timeout," an angry Ms. Albright said Thursday.

Palestinians, who see Jewish settlements as obstacles to plans for a state in the West Bank and Gaza, warned that expanding the enclaves could trigger more suicide bombings.

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