JERUSALEM (AP) – Prime Minister Ehud Olmert said Sunday that Israel is not bound by a December 2008 target for a peace agreement set at last week’s U.S.-hosted Mideast summit, telling his Cabinet that progress will depend on the Palestinians’ ability to rein in militants.

The comments reflected Olmert’s internal political weakness. Hard-liners have threatened to bring down his coalition government if he makes too many concessions in peace talks with the Palestinians. Olmert spoke a day before Israel was set to release 429 Palestinian prisoners in a gesture to moderate President Mahmoud Abbas, a step that has drawn criticism from the same hard-line members of Olmert’s Cabinet.

Israel’s prisons service said on Monday morning, 408 Palestinians would be released to the West Bank and 21 to Gaza.

In a message that could further anger Israeli hawks, Olmert’s defense minister, Ehud Barak, said he supports a measure to give compensation to Jewish settlers in the West Bank who leave their homes voluntarily, according to the Defense Ministry.

The measure would apply to settlements outside Israel’s separation barrier along the West Bank. the contentious barrier is meant to enclose main settlement blocs Israel plans to retain in a peace agreement, where two-thirds of the settlers live. The others, about 80,000, could claim compensation if they leave.

Settler leaders condemned the proposal. They oppose any building freeze or evacuation of settlements, even unauthorized outposts that dot West Bank hilltops.

The 2003 “road map” peace plan, reaffirmed at the Annapolis summit, requires Israel to remove dozens of outposts and halt all construction in the settlements.

Although Olmert’s coalition is strong on paper, commanding 78 of parliament’s 120 seats, it threatens to collapse over peace talks. Two parties in the five-party team oppose almost all concessions to the Palestinians, especially giving up West Bank territory or control over any part of Jerusalem.

At the Mideast conference, sponsored by U.S. President George W. Bush, the leaders agreed that “an effort will be made to hold accelerated negotiations in the hope that it will be possible to conclude them in 2008,” Olmert told his Cabinet, according to a statement. He added, “However, there is no commitment to a specific timetable regarding these negotiations.” The target coincides with the end of Bush’s term.

“Israel will not have to carry out any commitment stemming from the agreement before all of the road map commitments are met,” Olmert told his Cabinet. Under the plan, the Palestinians must rein in militant groups that attack Israel, a task that will be hard for Abbas to carry out so long as Islamic Hamas militants rule the Gaza Strip.

Hamas wrested control of the territory from forces loyal to Abbas in June, and remain firmly in control there. While Abbas claims to have authority over the territory, in practice he does not.

Hamas spokesman Taher al-Nunu said Olmert’s statement showed Israel has nothing to offer the Palestinians. He appealed to Abbas to join forces with Hamas and fight for a Palestinian state.

Rockets fired from Gaza land in southern Israeli towns almost daily, disrupting life there. Hamas said militants lobbed 34 mortar shells at Israel on Sunday.

In Gaza Sunday, gas stations closed down after owners refused to accept the reduced amounts of fuel offered by Dor Alon, the Israeli fuel company that supplies Gaza. Gas station owners blamed an Israeli decision to cut back on fuel supplies, but Dor Alon officials said Thursday they were cutting back because the Palestinians have not paid their bills.

“We ask our Palestinian people to be patient and not to hurry to go the stations and ask for fuel,” said Mahmoud al-Khozondar, a representative of the owners. “I think God will help us first.”

Hamas officials blamed the Abbas government for not paying the fuel bills, warning that the reduction could trigger a health crisis.