JERUSALEM, Dec 30 (Reuters) - Israeli Prime Minister Ehud Olmert urged the Palestinians on Sunday to rein in militants after an attack killed two Israelis, calling it a condition for Israel relaxing its grip on the West Bank.

"As long as the Palestinian Authority does not take the required measures, with the required intensity, to fight terror groups, the state of Israel cannot make any changes that may expose it to dangers and create security hazards," Olmert told his cabinet.

Palestinian militants on Friday killed two off-duty Israeli soldiers who were hiking near the West Bank city of Hebron. Two militants were also killed in the gun battle.

Palestinian Prime Minister Salam Fayyad condemned the attack and said several suspects had been detained by security forces.

Fayyad's interior minister, Abdel-Razak al-Yahya, said the government was already taking steps to dismantle militant groups.

In a statement issued on Sunday, Islamic Jihad and Hamas jointly took responsibility for the attack.

Olmert and Palestinian President Mahmoud Abbas agreed at a U.S.-sponsored peace conference last month in Annapolis, Maryland, to launch negotiations with the goal of reaching a statehood agreement by the end of 2008.

But Olmert has said Israel will not implement any agreement until the Palestinians meet their obligations under the long-stalled "road map" peace plan to rein in militants in both the West Bank, where Abbas's Fatah still holds sway, as well as the Hamas-controlled Gaza Strip.

"We do not intend to make any compromise on these (security) issues and they will remain an inseparable part of our negotiations with the Palestinian Authority," Olmert said. (Reporting by Joseph Nasr and Nidal al-Mughrabi; Writing by Adam Entous and Joseph Nasr; Editing by Sami Aboudi)

AlertNet news is provided by