JERUSALEM - Israel's prime minister yesterday offered additional funds and social benefits to tens of thousands of Jewish settlers in a move seen as an attempt to soothe tensions over new restrictions on construction in the West Bank.

Benjamin Netanyahu unveiled the proposal a day after thousands of settlers and their supporters demonstrated against the West Bank building restrictions outside his Jerusalem residence.

Netanyahu infuriated settlers and their backers two weeks ago when he imposed a 10-month moratorium on the construction of most new homes in the settlements. He said the freeze was meant as a gesture to bring Palestinians back to the negotiating table.

The Palestinians say the Israeli freeze is insufficient because it excludes East Jerusalem and more than 3,000 homes already under construction in the West Bank. The Palestinians claim both areas, captured by Israel in the 1967 Mideast War, for a future state. They insist on a total freeze before peace talks resume.

Netanyahu's proposal yesterday appeared to do little to ease the anger of settlers, who have grown increasingly strident in their attempts to keep out building inspectors who enforce the ban.

Yishai Hollender, a settler spokesman, said the proposal was "a step in the right direction, but there is still a long way to go. We will continue to struggle against the freeze."

Dovish lawmakers accused the prime minister of caving in to settler pressure. Labor Party legislator Amir Peretz said, "If anyone doubted that the whole intention of the freeze was just to buy time, now all of those doubts have been proven false."

Netanyahu spokesman Mark Regev said the proposal was not connected to the settlement controversy.

He said the funds would assist many distressed populations, including residents near the Gaza and Lebanon borders and Israeli Arab communities. The program will give preferential treatment to about two million Israelis, about 100,000 of whom are Jewish settlers.

"The position of this government is that the future of settlements must be negotiated," said Regev. "In the interim period, those who live in communities which face special challenges will receive the same things that other Israeli citizens receive."

The program, which is expected to be approved by Israel's cabinet, will provide a boost in funds for transportation, education, and health care, Regev said.

Also yesterday, Israel arrested the leader of the most persistent Palestinian protests against Israel's West Bank separation barrier. Abdullah Abu Rahmeh has been leading weekly barrier protests in the Palestinian village of Bilin for almost five years.

Israel began building the barrier during a wave of Palestinian suicide bombings that originated in the West Bank, with the purpose of keeping attackers out. The line was mostly unmarked and unguarded until then, but the path of the barrier cuts into the West Bank in many places.