Israel today scuttled Prime Minister Tony Blair's personal campaign to revitalize the Middle East peace process, responding to Sunday's suicide bombings in Tel Aviv by barring Palestinians from attending international talks Blair had planned to host here next week.

The Israeli foreign minister, Binyamin Netanyahu, pulled the plug on the talks in the most public of fashions: releasing the transcript of an acerbic telephone conversation with the British foreign secretary, Jack Straw, then going on BBC Radio to condemn the proposed talks as "a sham."

"Are you kidding?" Netanyahu told an interviewer, ridiculing the plan for Palestinian leaders to present British, European Union, Jordanian and Egyptian officials with a progress report about reforms in the Palestinian Authority. "Is this silly? It's a sham. There are no more possibilities for genuine reforming of this than there are of reforming [the] Saddam Hussein regime."

According to the transcript, Netanyahu told Straw that Britain should adopt President Bush's position "that leaders compromised by terror cannot be partners for peace." He added: "You in Britain are doing the exact opposite."

Straw retorted, according to the transcript: "No, it is Israel that is doing the opposite. Instead of concentrating on dealing with terrorism, it is striking at [Palestinian] delegates."

There were political and personal overtones to the dispute. Blair is scheduled to meet Thursday with the leader of Israel's Labor Party, Amram Mitzna, who is seeking to defeat Prime Minister Ariel Sharon and evict him and Netanyahu from office in elections this month. Israeli officials said Netanyahu was also angered by what he considered a personal snub during his visit to London last month, when Blair refused to meet with him and Straw refused to hold a joint news conference.

Blair and Straw, who have been the Bush administration's most staunch allies in its campaign against Iraq, for months have urged Washington to take the lead in restarting talks between Palestinians and Israelis, arguing that progress in the talks would make it much easier to rally Arab support, or at least neutrality, for the campaign against Hussein, the Iraqi president.

When the Bush administration showed little appetite, Blair launched his own initiative, inviting Palestinians and other Arab leaders to London for the equivalent of a mini-peace conference. U.S., European Union, Russian and U.N. officials who make up the so-called Quartet, which seeks to deal diplomatically with the conflict, were also invited, but Israel was not.

British officials attempted to play down today's diplomatic dispute, saying they hoped Israel would reconsider and eventually lift the ban. "Obviously, it doesn't look too good right now," conceded one official, who said the British government still believed that a conference could advance the cause of peace.

Israeli officials indicated they were unlikely to change their minds. "We consider Blair an important figure and a friend," said an official who insisted on anonymity. "But the feeling was that he was taking us for a free ride. The idea behind the conference was not to advance peace but to score points with the Arab world at our expense."