Israeli Prime Minister Ehud Olmert yesterday put forward a proposal for a state commission of inquiry to probe the failures of the war against Hezbollah.

At the weekly cabinet meeting, Olmert said that he would ask the cabinet to approve the panel's formation in the coming days. He said that he has liaised with Attorney General Menachem Mazuz about the establishment of the committee

Olmert also announced at the meeting the creation of a special ministerial committee for the rehabilitation of towns in the northern Israel.

"Bolstering the north is a national mission of the highest degree," Olmert said as he opened the meeting.

The steering committee for development of the Galilee and Haifa will be headed by Olmert, and will include deputy premier and minister for Galilee and Negev development Shimon Peres and Finance Minister Abraham Hirchson.

Meanwhile, the cabinet unanimously approved a proposal by Defense Minister Amir Peretz to grant special recompense to all reserves soldiers who served in Lebanon in the past month.

This proposal will be formally approved in the next cabinet meeting. The recompense will apply both to soldiers who received a call-up notice and to soldiers who volunteered for reserve duty.

The 34-day long Israeli-Hezbollah conflict ended last Monday morning after the UN resolution 1701 was adopted by the governments of Israel and Lebanon respectively.

Resolution 1701, unanimously adopted by the UN Security Council on Friday, calls for Israel's withdrawal and authorizes an increase of the existing UN force in Lebanon to 15,000 troops to help Lebanese troops take control of southern Lebanon as Israel withdraws.