JERUSALEM (Reuters) - Israel's top general threatened Sunday to destroy hundreds of Palestinian refugee homes after the Supreme Court cleared the way for demolitions in a flashpoint Israeli-held corridor on the Gaza-Egypt border.

Reuters Photo AP Photo Slideshow: Mideast Conflict

Secretary of State Colin Powell (news - web sites) said the United States opposed the destruction of homes in Rafah, adjacent to the "Philadelphi" buffer zone.

The United Nations (news - web sites) says Israel has made more than 12,000 people homeless in Rafah since the start of a Palestinian uprising when peace talks failed in September 2000, and further demolitions would be in "grave breach" of international law.

"Hundreds of houses have been marked for destruction," a senior official quoted Israeli army chief Moshe Yaalon as telling the cabinet at its weekly meeting, without giving any timeframe for their demolition.

Israel's Channel One television reported Israeli troops were massing again along the buffer zone Sunday following the Supreme Court decision. The army had no comment.

The court, in refusing to block the demolitions, appeared to set broad terms for bulldozing homes, saying the army could destroy houses for operational purposes or to protect soldiers.

The demolitions are likely to make thousands of Palestinians homeless. Dozens have already started to evacuate their homes in the camp after learning of the decision.

"I don't know what to take. I will start with clothes or the refrigerator or the television," said Abed al-Majid Abu Shamala, 52, preparing to flee a four-story dwelling.

Palestinian Prime Minister Ahmed Qurie accused the Israeli court ruling of permitting "ethnic cleansing crimes and collective punishment of innocent civilians." In a statement, he urged the international community to intervene.

Nabil Abu Rdainah, an adviser to President Yasser Arafat (news - web sites), said the Palestinians would seek a special U.N. Security Council session to condemn the demolitions.

At least 29 Palestinians, including militants and civilians, and 13 Israel soldiers were killed in fierce fighting in the Gaza Strip (news - web sites) in the past week.

Seven soldiers died in or near the Rafah buffer area, which Israeli officials said would be widened to make it safer to patrol and less accessible to militants who smuggle weapons in by tunnels from Egypt.

Yaalon told the cabinet that houses picked for demolition were believed to be concealing tunnels or to have been used by gunmen attacking soldiers.

MORE THAN A THOUSAND HOMELESS

U.N. relief officials estimated that Israeli armored bulldozers leveled more than 80 buildings in Rafah in recent days, leaving about 1,100 Palestinians homeless. The army said it demolished structures that provided cover for armed men.

"We are extremely alarmed that even more demolitions are planned," said UNRWA chief Peter Hansen in a statement.

At a news conference in Jordan, Powell said Washington recognized an Israeli right to self-defense but that "the wholesale bulldozing of houses...is something that we must express our opposition to."

Powell also rebuked Arafat for urging Palestinians, in a speech Saturday, to "terrorise the enemy."

Prime Minister Ariel Sharon (news - web sites) told his cabinet that Israel would not permit militants to attain weapons capabilities "which would threaten the heart of the nation even after our disengagement from Gaza."

Sharon also said Israel was in contact with Egypt to amend their peace treaty to allow Egypt to deploy more forces in Sinai and help secure its border with Gaza, an Israeli official said.

Some 120,000 Israelis rallied in Tel Aviv Saturday in support of Sharon's stalled Gaza plan to evacuate all Jewish settlements in Gaza and four in the West Bank, which senior officials said he would resubmit with minor alterations.

(Additional reporting by Ori Lewis in Jerusalem, Nidal al-Mughrabi in Gaza and Wafa Amr and Mohammed Assadi in Ramallah)