Prime Minister Ariel Sharon today defended Israeli approval of the U.S.-backed "road map" peace plan to his political party, saying Israel could not keep 3.5 million Palestinians under occupation forever.

But Sharon also made it clear he still had reservations about the plan, which includes a freeze on expansion of Jewish settlements in the West Bank and Gaza Strip.

Sharon won cabinet approval for the peace plan on Sunday, despite the doubts of some ministers including members of his Likud Party, many of whom oppose establishment of a Palestinian state.

"We need to reach a political arrangement [with the Palestinians]. I want to say clearly I will do everything to reach a political arrangement because I think it's important for Israel," Sharon said at a stormy meeting with Likud legislators.

"We don't like the word, but this is occupation. To keep 3.5 million Palestinians under occupation is bad for Israel and the Palestinians. . . . We need to get away from this in a way that won't hurt our security. This cannot continue forever," he said.

But Sharon said he would not press on with the plan if the Palestinians did not halt violence against Israelis in their 32-month uprising for an independent state. "If terrorism continues, the Palestinians will not receive anything," he said.

The plan's initial steps include an end to violence, an easing of Israel's grip on the West Bank and Gaza, the dismantling of Jewish settlement outposts erected since March 2001 and a freeze on settlement expansion.

The Israeli government has set out a number of reservations that it wants the United States to address as the road map is implemented. The Palestinians have backed the plan.

Hinting at one reservation, Sharon told a legislator from a West Bank settlement that "natural growth" -- the building of new homes at the settlement as its population increases -- would be possible for generations to come. It was not clear whether Sharon meant he supported building to accommodate "natural growth" at all settlements.

Meanwhile, the peace plan won praise from both Israeli and Arab officials when they met on the island of Crete at a meeting organized by the European Union. EU foreign policy chief Javier Solana said it was a sign of hope that Syria, Israel's longtime foe, had sent its foreign minister to the meeting, after sending low-level delegations for eight years.