Jerusalem ? A defiant Israel decided Tuesday to block a U.N. inquiry into the fighting at the Jenin refuge camp, while 26 Palestinian civilians and policemen emerged from the besieged Church of the Nativity in Bethlehem.

It was the largest number to exit the Bethlehem compound since a standoff between Israeli troops and armed Palestinians began nearly a month ago, but the core dispute over the fate of two dozen wanted gunmen remained unresolved.

In Hebron, columns of armored vehicles rumbled out of the Palestinian city after a two-day incursion during which nine Palestinians were killed and about 250 arrested, including 40 wanted men, the Israeli military said.

In the West Bank town of Jericho, U.S. and British experts toured a local jail Tuesday another step in a U.S.-backed deal that would culminate in Yasser Arafat’s release from months of confinement at his West Bank headquarters.

Israel said it would only release Arafat once six wanted Palestinians inside his compound had been transferred to the Jericho prison, where they would be held under U.S. and British supervision. Palestinian officials said the prisoners could be transferred within 24 hours, while Israel said there was no agreed upon timetable.

On Tuesday, tanks continued to ring the Palestinian leader’s compound, and troops enforced a curfew in the adjoining neighborhood.

In Jerusalem, Israel’s security Cabinet decided not to cooperate with a U.N. inquiry into events at the Jenin camp until six Israeli demands had been met regarding the mandate and composition of the team.

Israeli Foreign Minister Shimon Peres said Tuesday he doubted the United Nations would agree to the Israeli conditions and expressed concern that it would now impose the inquiry on Israel. “I think the immediate danger is that the Security Council will decide to establish this committee without taking into account Israel’s opinion,” Peres told Israel Army Radio.

Peres said he did not expect the United States to veto such a step, since Washington supports the inquiry in principle. Israeli officials had said Monday they expected U.S. support in a showdown with the United Nations in exchange for Israel’s agreement to release Arafat from confinement. However, Peres denied the United States ever held out such a promise.

U.N. Secretary-General Kofi Annan said Tuesday the United Nations had already done everything to answer the Israeli concerns. “I think we have been very forthcoming,” Annan said, leaving the fate of the mission in doubt.

But Dore Gold, an adviser to Israeli Prime Minister Ariel Sharon, said that “we have not received the type of assurances in writing that would satisfy the needs of the state of Israel.”

Undersecretary-General Kieran Prendergast briefed the U.N. Security Council on the latest developments early Tuesday afternoon and diplomats quoted him as saying Annan was “leaning heavily” toward disbanding the fact-finding team because of the nature of Israel’s objections.

Israel initially agreed to the formation of the fact-finding team, but then raised a number of concerns. Israel wants a say over who can be called as a witness and what documents will be presented to the panel, and insists that Israeli soldiers be protected from prosecution. Israel wants more counterterrorism experts to be added to the group, and demands that activities by Palestinian militants in the camp also be scrutinized.

“As long as these conditions have not been met, there is no possibility of beginning the inquiry,” the security Cabinet said in a statement.

Jenin was the scene of the fiercest fighting during Israel’s April military offensive against Palestinian militias, and so far about 50 Palestinian bodies, most of them young men, have been recovered from the camp. Twenty-three Israeli soldiers were also killed in house-to-house combat with Palestinian gunmen in Jenin.

The Palestinians alleged troops carried out a massacre of civilians, while Israel said nearly all of those killed were armed men.

Palestinian Information Minister Yasser Abed Rabbo said Israel’s decision “is a clear indicator that the Israeli government committed war crimes in the Jenin refugee camp.” Abed Rabbo demanded that the U.N. Security Council impose sanctions on Israel.

Israel has kept the U.N. fact-finding team from arriving, saying it fears an anti-Israel bias that will produce a highly critical report on Israel’s military operation in the Jenin camp. The team was to have been in place in Jenin on Saturday, but has been waiting in Geneva for several days for a go-ahead to fly to Israel.

In Hebron, an Israeli army commander, Col. Moshe Hager, said Israeli troops were beginning a gradual pullout, and reporters accompanying the troops saw soldiers packing their bags.

Earlier Tuesday, troops had searched for wanted Palestinians and tanks surrounded Al Ahli Hospital, barring ambulances from entering or leaving, hospital officials said. The Israeli military said there was suspicion a wanted Palestinian was hiding in the hospital.

Israeli forces entered Hebron on Monday, in response to a weekend attack on a Jewish settlement in which four Israelis, including a 5-year-old girl, were killed.

Also Tuesday, Israeli troops briefly raided the village of Shawara, near Bethlehem and arrested six Palestinians before withdrawing, the army said.

In Bethlehem, Ibrahim Faltas, the Franciscan priest in charge of the Church of the Nativity, led the Palestinian men, including civilians and members of the Palestinian security forces, through the door and onto Manger Square, one at a time.

As they approached Israeli soldiers on the square, the Palestinians held open their jackets to show they were not carrying weapons. The men then got on an armored bus in the square.

Israel’s army will verify their identities and then release them, said a Palestinian negotiator, Ibrahim Natche. A total of 26 Palestinian men, including one wounded man, came out of the church, said Israeli military spokesman Olivier Rafowicz.

The standoff began April 2 when Israeli troops invaded Bethlehem in search of Palestinian militants. Before Tuesday, about 50 people had come out of the church, and the largest group to emerge at any one time was nine youths who left last Thursday.

The core dispute is over the fate of about two dozen Palestinians wanted by Israel. In Washington, Secretary of State Colin Powell said that all the elements of an accord to end the Bethlehem church standoff were in place, though he said difficult issues remain.

U.S. and Israeli officials in Washington said privately the accord probably would be based on Israel’s proposal to offer wanted men holed up in the Church of the Nativity a choice of exile or trial in Israel. However, Palestinian negotiators insisted the wanted men be transferred to the Gaza Strip, where accusations against them would be handled in the Palestinian legal system.

In Ramallah, the crisis at Arafat’s headquarters appeared near conclusion.

Israel and the Palestinians agreed Sunday to a U.S. proposal that restores Arafat’s freedom of movement, and in exchange, six wanted men inside the compound will be imprisoned in a Palestinian jail, watched over by U.S. and British officials.

Yarden Vatikai, an adviser to Israeli Defense Minister Binyamin Ben-Eliezer, said Israel would withdraw its tanks from Arafat’s compound, allowing him to leave, once it received word from the American and British experts that the six wanted men were in prison on Jericho.

Abed Rabbo said the transfer could take place within 24 hours. However, Vatitai said there was no agreed timetable.

Arafat had been confined to Ramallah since December, and to his compound since January. Israeli troops took over most of Arafat’s headquarters March 29, as part of a major military offensive against Palestinian militants.

A makeshift Palestinian court has convicted four of the men in the killing of Israeli Cabinet Minister Rehavam Zeevi last October. The fifth man leads the political faction that carried out the killing and the sixth is an Arafat aide suspected of orchestrating a large arms smuggling operation.