OCCUPIED JERUSALEM, October 13 (IslamOnline & News Agencies) - The U.S. ambassador to Israel Dan Kurtzer has passed on a message to Israeli Prime Minister Ariel Sharon criticizing his refusal to alleviate the hardship in the Palestinian territories and to limit civilian deaths, Israeli army radio said Sunday, October 13.

The message was passed on at the weekend, just days before Sharon is due to meet U.S. President George W. Bush in Washington on Wednesday, October 16.

It criticized Israel's refusal to improve the economic situation in the Palestinian territories - Israel has reoccupied the West Bank since June 2002 - and to allow the free movement of Palestinians in those areas, the radio said.

Washington also reiterated its criticism of the high number of Palestinian civilians killed in the West Bank and in particular in the Gaza Strip, where a four-year-old boy was crushed to death Sunday when a wall fell on him as Israeli troops blew up a house in Rafah allegedly used for smuggling weapons.

A U.S. official refused to confirm the radio report, although he did say there were "differences" between the two close allies over Israel's freezing of Palestinian tax and customs revenues, a sum Israel puts at around $420 million, Agence France-Presse (AFP) reported.

"The United States thinks Israel could make a gesture, otherwise Salam Fayad, the [acting] Palestinian finance minister, will be unable to put together a budget," said the U.S. official, who asked not to be named.

However, the International Monetary Fund (IMF) puts the total customs duties blocked by Israel at about $600 million.

Israel froze the funds at the start of the Intifada two years ago, saying the money could be used to finance anti-Israeli attacks.

However, since the summer, it has released about 42 million dollars to the Palestinians in three trenches, with a final handover of $4.7 million released last week.

The Israeli daily Haaretz said Sunday that Washington was demanding that Israel evacuate one or two towns in the West Bank, such as the Palestinian self-rule sector of Al-Khalil (Hebron).

The town is divided between 120,000 Palestinians and an enclave of Jewish settlers, but since June 2002, the army has reoccupied Hebron's autonomous Palestinian areas.

Israeli forces pulled back from Bethlehem according to a security plan reached in August 2002 that was supposed to be extended to Hebron and areas of the Gaza Strip, but the army has failed to follow through, pointing to anti-Israeli attacks by as an excuse.

Under the plan, Palestinian security forces were to take measures to prevent attacks on Israeli targets in return for the withdrawal.