Israeli security chief warns of armed Jewish right

JERUSALEM (Reuters) - Israel's radical right wing could resort to armed attacks to scupper any accord under which the occupied West Bank would be ceded to the Palestinians, the official in charge of Israeli leaders' security said on Sunday.

"We discern a willingness among the far right to resort to using guns in order to prevent progress in the diplomatic process," Yuval Diskin, head of the Shin Bet domestic intelligence agency, told Prime Minister Ehud Olmert's cabinet.

A Shin Bet source who provided Reuters with quotes from Diskin's briefing said he stopped short of predicting settlers or their supporters would try to kill Israeli politicians.

November 4 is the anniversary of the 1995 assassination of Prime Minister Yitzhak Rabin by an ultranationalist Jew who said he carried out the killing to halt Israeli-Palestinian efforts to exchange land for peace.

In the occupied West Bank, settler violence against Palestinians and Israeli security forces has been on the increase. Olmert reiterated at the cabinet session that such attacks were "intolerable."

Settler leaders have condemned the violence but have made no secret of their community's opposition to the evacuation of settlements -- which have been ruled illegal by the World Court -- to make way for a Palestinian state.

The cabinet later decided on a series of steps to take against settler outposts in the West Bank built without government approval, including a crackdown on lawbreakers and a halting of any support for their financing or infrastructure.

Israel has in the past failed to carry out long-standing promises made to U.S. President George W. Bush to evacuate dozens of the West Bank outposts, an issue that has complicated U.S.-backed peace talks.

Olmert has said Israel would have to withdraw from almost all the territory it captured in the 1967 Middle East war.

But he is now serving in a caretaker capacity after resigning in September in a corruption scandal, and the peace deal that Israel and the Palestinians had hoped to achieve this year appears out of reach in the coming months.

Olmert remains prime minister until a new government is in place after a parliamentary election on February 10.

(Writing by Dan Williams; editing by Tim Pearce)