JERUSALEM, Feb. 7 (AP) - Ariel Sharon, flush from an election victory seen as a frustrated Israeli public's veto of more concessions to the Palestinians, pledged in a symbolic pilgrimage to Judaism's Western Wall on Wednesday that contested Jerusalem will remain in Israeli hands forever.

Sharon's promise, delivered in his first public appearance after his decisive win over incumbent Prime Minister Ehud Barak, ran directly counter to a key Palestinian demand for control over Jerusalem's walled Old City and its holy shrines.

However, Sharon aides were quick to portray Israel's new leader a pragmatist the Palestinians will be able to do business with. ``Sharon wants to bring peace,'' said an adviser, Raanan Gissin. ``I certainly believe the Arabs ... know they may not get everything they want, but it will be a real agreement.''

Palestinian officials said they were ready to hear Sharon's offers. Palestinian leader Yasser Arafat told Sharon in a congratulatory message that his hands ``remain stretched out in peace,'' according to Sharon's advisers.

Arafat advisers said they were unaware of such a message, but said they expected the leaders to make direct contact soon.

Palestinians said they would not contemplate any Israeli proposals that fall short of Barak's most recent offer - a Palestinian state in virtually all of the West Bank and Gaza Strip, as well as parts of Jerusalem. Sharon has flatly ruled out such concessions, and said he wouldn't begin talks until Palestinian violence ends.

Arafat, meanwhile, came under pressure to ostracize Sharon, widely reviled among Palestinians as a ruthless oppressor. Arafat's popular Fatah movement, which has led a bloody insurgency against Israel, demanded that he not resume peace talks as long as Sharon is in power.

``The uprising and resistance are our strategic choice,'' Fatah said in a leaflet distributed Wednesday.

The 17 weeks of fighting, triggered by Sharon's Sept. 28 visit to a key Jerusalem shrine holy to both Jews and Muslims, have turned many Israelis against the far-reaching compromises Barak offered the Palestinians and contributed to his political downfall.

Ephraim Sneh, the deputy defense minister under Barak, said the prime minister was simply ahead of his time. ``Barak presented to the Israeli people the real price of peace, without illusions, and many Israelis cannot digest it yet,'' Sneh said.

Barak's most controversial concession was his readiness to give up Israeli claims to the disputed Jerusalem hilltop compound revered by Jews as the Temple Mount and by Muslims as Haram as-Sharif, or Noble Sanctuary.

On Wednesday, Sharon visited the Western Wall, a retaining wall of the Temple. Using the ancient honey-colored stones as a backdrop, the secular Sharon said that Jerusalem would remain the ``eternal and indivisible capital of Israel, with the Temple Mount at its center for all eternity.''

His predecessors, including Barak, have also celebrated their election victories at the Western Wall. However, Sharon's visit took on added significance because of his controversial September tour of the adjacent hilltop.

That trip, under heavy police guard, was meant to demonstrate Israeli sovereignty over the sacred compound and triggered widespread Palestinian protests. Nearly 400 people, including more than 300 Palestinians and dozens of Israelis, have been killed in clashes since then.

Palestinian Khader Sabaneh, sipping coffee in a narrow passageway of the Old City near the entrance to the shrine, said Sharon's Western Wall trip was another provocation, though of lesser proportions.

``He is just trying to create more obstacles and slow the peace dialogue,'' said Sabaneh, 49. ``No one can trust Ariel Sharon if he says he is moving toward peace with the Palestinians.''

Aware of the widespread trepidation over his victory, Sharon moved swiftly to reassure world leaders. Campaign adviser Eyal Arad said Sharon would send three envoys, including former Defense Minister Moshe Arens, to the United States in the coming days with the message that Israel is serious about reaching a peace deal.

Sharon's immediate challenge is to put together a government before March 31 when he needs to get the 2001 budget passed in the divided parliament. A failure would spell the end of his rule and force new elections in April.

Sharon said Wednesday it was ``vital'' that Barak's Labor Party join his government.

Labor is divided over the offer, and coalition negotiations were complicated further by Barak's announcement that he is stepping down as party leader.

A temporary party chief - elder statesman Shimon Peres has been named as a possible candidate - would likely not have the moral authority to make the fateful decision to move Labor into the Sharon government despite deep ideological differences.

Several senior Labor figures, including Parliament Speaker Avraham Burg, said they were considering a bid for party leadership, but primaries might not be held for another three or four months.

Barak, meanwhile, said he received a call from U.S. President George W. Bush who praised him for his ``political courage'' in advancing Mideast peacemaking.

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