TEL AVIV, May 27: A far-right Israeli minister called on Thursday for a population swap involving minority Arabs living in the Jewish state and Jewish settlers living in occupied territories.

It was the latest "transfer" proposal from ultra-nationalist Israelis opposed to Prime Minister Ariel Sharon's plan for unilateral pullout from Gaza and the West Bank to "disengage" from conflict with Palestinians seeking statehood there.

Israel's opposition left, Israeli Arabs and Palestinian Arabs have all branded such proposals as racist and illegal since they aim to excise much of a minority the right deems a threat and annex certain lands Palestinians want for a viable state.

Transport Minister Avigdor Lieberman, head of the National Union party in Mr Sharon's coalition, said he was ready to evacuate his West Bank settlement home to achieve his proposal.

Asked in an interview with the daily Yedioth Ahronoth if he would exchange Israeli Arabs for Jewish settlers, Mr Lieberman said: "Yes, absolutely. That is the principle we have to adopt."

"If we want to stop the conflict we must separate the two peoples. That is the only thing which can bring stability," he said, adding that his plan would include a land swap.

Mr Lieberman pointed to the division of Greeks and Turks on the Mediterranean island of Cyprus since 1974 as an example. "This seems brutal and sounds brutal, but there is no other solution," he said.

Mr Lieberman said about 90 per cent of Israel's 1.2 million Arabs, about a fifth of the population, would "have to find a new Arab entity" in which to live beyond Israel's borders.

"If this principle is accepted, I am willing for there to be (settler) evacuations including my own house in Nokdim." The interview was highlighted in the sports section of Yedioth following last week's unprecedented victory by Arab club Bnei Sakhnin in the Israeli State Cup final, something hailed by team captain Abbas Suan as "a new era for Israel's Arabs".

As an example of his plan, Mr Lieberman said residents of the town where the club is based would have to move to Palestinian-controlled areas where they could represent Palestinians. "Perhaps they should be called Hapoel Nablus," he said, referring to the West Bank's largest city. -Reuters