Israel has never removed an officially sanctioned settlement, and the proposal raised questions about whether Sharon really intended to carry it out. Sharon denied the proposal was formally made.
Israeli radio stations said that in exchange for the settlers' evacuation, the government would guarantee legislation that no other settlements would be uprooted until a peace treaty is reached with the Palestinians.
Settler leader Shaul Goldstein said the settlers turned down the proposal. Media reports said a top Sharon aide relayed it to settler leaders.
Sharon told reporters his unilateral disengagement program is not yet complete, and the reports about the proposal were "wrong."
"I have no intention of passing such a law that would tie the hands of the government," he said.
Israel Radio said the settlements earmarked for evacuation were Ganim, Kadim, Sanur and Homesh in the West Bank, and Netzarim, Kfar Darom and Morag in the Gaza Strip.
All seven settlements are small and isolated and frequent targets of Palestinian attacks. The most prominent is Netzarim, a heavily fortified enclave southwest of Gaza City.
Israel has never removed a veteran settlement in the West Bank and Gaza and has made only halting efforts to evacuate unauthorized outposts in accordance with the U.S.-backed "road map" peace plan, which aims at creating a Palestinian state next year.
Middle East expert Mark Heller of the Jaffee Center for Strategic Studies at Tel Aviv University said the evacuation proposal did not appear to be a serious plan.
"It is a fairly modest redeployment," he told The Associated Press. "It appears to me that all that means is that he is trying to play for time, particularly with the Americans." Israeli media have reported Sharon will visit Washington next month, though officials from both countries have not confirmed that.
The United States has been promoting the "road map" peace plan. However, talks have been frozen for months, and neither Israel nor the Palestinians implemented the first steps of the plan.
Sharon has threatened unilateral measures if the talks remain frozen, imposing a temporary boundary on the West Bank and moving some settlements to improve Israel's security deployment. In his remarks Tuesday, Sharon linked the reports about evacuating seven settlements to his unilateral disengagement plan, saying no proposals would be made until the plan is completed.
Bentzi Lieberman, head of the main settler organization, said evacuation would amount to rewarding Palestinian terror and he urged settlement backers in Sharon's government to quit.
"This should arouse parliament and the nationalist parties and those inside the Likud itself," he told Israel TV, referring to Sharon's party. "It looks as if he won't have a government if he gets on the plane with a program that in fact encourages terrorism."
However, Sharon's hard-line coalition partners have said they would leave his government only if he actually carries out his ideas, underlining doubts about whether Sharon is serious about moving or evacuating settlements he has steadfastly promoted for decades.
With Sharon threatening unilateral steps if road map talks remain frozen, U.S. and Egyptian efforts to revive the international peace plan resumed Tuesday.
Egyptian Foreign Minister Ahmed Maher met in the West Bank with Yasser Arafat (news - web sites) and other Palestinian leaders.
Palestinian officials said the talks centered on fresh efforts to get militant groups to declare a halt in attacks on Israelis and on Palestinian opposition to a security fence Israel is building around the West Bank.
