Prime Minister Ariel Sharon's government approved in principle on Sunday a Gaza pullout under a compromise deal that would require further cabinet votes before any Jewish settlements are uprooted, Israel TV said.
Cabinet ministers voted 14-7 in favour of the proposal that envisages the removal of all 21 Jewish settlements in Gaza and four of the 120 in the West Bank by the end of 2005.
The four-stage "Revised Disengagement Plan - Central Principles" also says Israel intends to keep some occupied West Bank land permanently.
A preface to the document stipulating that Sunday's vote was not a green light to begin the physical removal of settlements helped Sharon sway three dissident cabinet ministers from his right-wing Likud party to support the plan.
Likud members rejected Sharon's US-backed disengagement proposal in a May 2 referendum, touching off a political crisis that threatened to fracture his governing coalition and led him to fire two far-right cabinet ministers on Friday.
In a climb-down by Sharon from his original plan, implementation of each of the four envisioned pullouts would be put to a cabinet debate and vote.
"Circumstances at the time," the revised plan said, will determine "whether to evacuate settlements, and if so, which ones and at what pace".
Meanwhile, "preparatory work" will begin on settlement evacuation, a reference to financial compensation and new homes for the 7,500 Israelis who live in the Gaza Strip, which has a Palestinian population of 1.3 million.
Political sources said Sharon promised the cabinet no settlements would be removed before March.
Prime Minister Ariel Sharon said his cabinet's approval of his Gaza pullout plan showed that Israel was "taking its future in its own hands".
"Disengagement (from the Palestinians) is getting under way," he told a US Jewish youth gathering in Jerusalem shortly after his cabinet voted 14-7 in principle for his plan, diluted to ward off the collapse of his right-wing coalition.
"The government decided today that by the end of 2005 Israel will leave (all 21 Jewish settlements in) Gaza and four settlements (in the West Bank). The state of Israel made a decisive step for its future," he said.
"Most of the people of Israel understand the tremendous significance of the plan ... It is a decision that is good for Israel's political standing, economy and the demography of the Jewish people in the land of Israel.
"Israel doesn't intend to wait any longer for the Palestinians. They understand that if they don't work to liquidate terror they will continue to lose important assets..." Sharon added.
Palestinians welcome any withdrawal from territory they seek for a state but suspect Sharon's plan will prove a manoeuvre to trade tiny, impoverished Gaza for larger parts of the West Bank where the great majority of settlers live.