By MARJORIE MILLER

Los Angeles Times

JERUSALEM – Prime Minister Ehud Barak declared that Israel is in a fight for its life after Palestinians tore apart a Jewish shrine in the West Bank on Saturday and violence spread to the northern border, where Lebanese Islamic guerrillas captured three Israeli soldiers.

Barak issued an ultimatum to Palestinian Authority President Yasser Arafat to end within 48 hours the pitched street battles that have raged for 10 days in Jerusalem, the West Bank and Gaza Strip. He also warned the governments of Syria and Lebanon that he expects them to secure the release of the soldiers being held by Hezbollah guerrillas.

The rapidly unfolding events on the eve of Judaism’s holiest day, Yom Kippur, left Israelis wondering whether they were heading for all-out war with their Arab neighbors. For the first time, the prime minister elected in May 1999 on a platform of peacemaking braced the country for a period of prolonged conflict.

“A new situation is becoming clear. It is a fight for our right to be here and to lead a free existence here,” Barak said on national television. “This will not be an easy struggle. It is likely to last a long time.”

He called for the politically fractious country to close ranks and suggested that he would be willing to form a national unity government if necessary.

Barak spoke as gunbattles continued across the West Bank in another day of violence that Israel had hoped to avoid by pulling its troops before dawn from Joseph’s Tomb in the heart of the Palestinian-controlled city of Nablus.

Israel’s military commander in the West Bank, Brig. Gen. Benny Gantz, said the withdrawal was arranged with “the most senior Palestinian officials,” who then failed to keep their end of the deal. One Israeli soldier was shot on the way out of town and, soon afterward, Palestinian gunmen and civilians stormed the site, setting fires and pulling the building apart piece by piece.

Critics accused the government of surrendering territory under fire, but Gantz said the pullback was a tactical one meant to reduce tensions.

The Palestinian celebrations in Nablus, however, appeared to have emboldened Palestinian militias that later opened fire on Jewish settlements in the contested city of Hebron and elsewhere in the West Bank. Late Saturday night, Israeli forces were fighting running gunbattles with the Palestinians.

In Washington, President Clinton canceled a political trip to Ohio and Indiana to remain at the White House so he could keep in close contact with the deteriorating situation.

Barak, in his broadcast remarks, not only called on Arafat to end the violence within 48 hours but said that if the Palestinian leader fails to do so, Israel will have to assume that the “political track” has come to an end.

“Until now, my orders were to exercise restraint, not to initiate but just to react. 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, adding: “We will instruct the (Israel Defense Forces) and the security forces to use all means at their disposal to stop the violence.”

More than 80 people have been killed and more than 1,000 injured – the vast majority of them Palestinians – in the clashes that began Sept. 28 after right-wing Likud Party leader Ariel Sharon made a trip to the most contested holy site in Jerusalem, known to Jews as the Temple Mount and to Palestinians as Haram al Sharif.