JERUSALEM, Oct. 7 (AP)--Prime Minister Ehud Barak issued a 48-hour ultimatum to Yasser Arafat on Saturday, saying that that unless the Palestinian leader stops violence in the West Bank and Gaza Strip, Israel will call off peace talks and let Israeli troops act with full force.

The strong statement from the embattled prime minister came after Hezbollah guerrillas seized three Israeli soldiers in an ambush Saturday at the Israeli-Lebanese border.

Arafat's top adviser, Nabil Aburdeneh, accused Barak of employing ``blackmail that can only lead the region to wars we don't want,'' but did not say what the Palestinians' next move would be.

Barak vowed to win the soldiers' return, warning Lebanon and Syria--the main power broker in the country--that they were responsible for the captives' safety. At the same time, his deputy defense minister Ephraim Sneh said Israel was ready to ``fight on two fronts''--the Lebanese border as well as in the West Bank and Gaza Strip.

``We have enough strength for that. We shall have to be less restrained than we were in the past,'' Sneh said.

Barak said he was no longer convinced Arafat was ready for a peace agreement, blaming Arafat for the clashes between Israeli soldiers and Palestinian protesters that have killed at least 80--most Palestinians.

Arafat ``has apparently chosen violence and he will bear the responsibility for the consequences of that choice,'' Barak said.

``Until now, my orders were to exercise restraint, not to initiate, but just to react,'' Barak told a news conference after convening his Cabinet and army commanders for an emergency session.

``If we do not see a change in the patterns of violence in the next two days, we will see this as the cessation of the peace talks by Arafat,'' he said, ``and will instruct the Israeli Defense Forces and the security forces to use all means at their disposal to stop the violence.'' An Israeli government statement warned of ``forceful action'' to ensure the safety of Israeli troops and communities along the border.

Barak has come under growing pressure to take tougher steps. Members of his Cabinet urged him Saturday to form a national unity government with the hawkish opposition Likud party. That would make resuming negotiations with the Palestinians difficult, since Likud is vehemently opposed to concessions.

Barak's announcement came as violence sharply declined in the Palestinian territories Saturday--but it followed the trashing Saturday morning of Joseph's Tomb, a holy site in the West Bank town of Nablus, by Palestinians.

Barak ordered Israeli troops withdrawn from the site, putting it in control of Palestinian security forces. Within hours, a mob overwhelmed the site, burning parts and tearing up Jewish holy books left by seminary students. The scenes, broadcast on television, were considered a humiliation by many Israelis--a desecretion of religious texts by others.

Until now, the army has used assault rifles, snipers and rockets launched from helicopters to disperse Palestinian gunmen. Israel has trained tank guns on Palestinian towns as a warning, but has not fired.

A combative Arafat, speaking before Barak set his deadline, blamed Israel for what he said was a ``dangerous escalation'' in the Palestinian areas and the Arab world.

Developments in the north, meanwhile, ended the relative peace enjoyed at the Israeli-Lebanese border since Barak decided to withdraw Israeli troops from southern Lebanon in May.

Earlier Saturday, hundreds of Palestinian refugees charged toward the border fence from the Lebanese side, hurling stones at Israeli soldiers. Troops opened fire, killing one Palestinian and wounding 14.

Barak said he was holding intense diplomatic contacts to try to win the freedom of the three Israeli soldiers. He said he has spoken three times by phone to President Clinton over the last 24 hours and has also been in touch with U.N. Secretary General Kofi Annan. After nightfall, Israeli transport helicopters airlifted forces to the northern border.

The three soldiers were captured in what appeared to be a carefully planned Hezbollah ambush soon afterward. Israel TV's Channel Two said guerrillas fired rockets at an Israeli post in the disputed Chebaa farms border region, claimed by both Lebanon and Israel. When Israeli troops arrived at the scene in an open truck, guerrillas fired more rockets, cut through the fence and snatched three soldiers. The captives were driven away in a civilian car, the TV report said.

Israeli helicopters later searched the area, while Helicopter gunships lay down machine-gun fire on roads, injuring a family of four, Lebanese security officials said.

Hezbollah said in a statement that it dedicated the raid to 12-year-old Mohammed Aldura, a Palestinian boy killed by Israeli fire during a gunbattle in the Gaza Strip last week. The boy's terrifying last moments, as he and his father huddled behind a metal barrel, were broadcast around the world.

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