The Sun.
London, England, 1866-07-23 00:00:00

PRUSSIAN REFUSAL.

" His Majesty the King of Prussia being unable
to adhere to other conditions than those transmitted
through M. Lefebvre de Behaine cannot give his
consent to the counter-proposals of his Majesty
the Emperor of Austria. Two points in especial
place the King under the necessity of declining the
combination substituted at Vienna for that in which
his Majesty had acquiesced, viz., the capability of
continuing its movements, which would thus remain
to the Austrian Southern army, and the refusal to
consent to the Prussian troops occupying the line
from the Thaya to Lundenburg. No necessity
therefore exists for sending a commissioner to this
city to come to an understanding upon an agree-
ment."

FLORENCE July 22, Evening.

The conditions placed by Italy to her acceptance
of the armistice, and communicated to Prussia and
France, particularly with respect to the Tyrol, have
not yet been accepted by Austria.
According to the Italie, the commanders of the
Italian army have declared that no suspension of
hostilities can take place between Austria and Italy
before the present military movement has been com-
pleted, and the Italian army corps have secured a
safe and regular position.
The Austrian commanders in Venetia have im-
posed extraordinary taxes by way of fine, upon those
localities where public rejoicings took place in cele-
bration of the cession of Venetia by Austria.

AUSTRIA AND PRUSSIA.
PARIS, July 23.
Austria has accepted the preliminaries of peace
proposed by Prussia.

THE NAVAL ENGAGEMENT BEFORE
LISSA.
(OFFICIAL ITALIAN ACCOUNT.)

FLORENCE, July 21.
The following official account of the naval en-
gagement between the Austrian and Italian fleets,
dated the Straits of Lissa, July 20, has been re-
ceived here

The Austrian squadron not having made its ap-
yearance as expected on the evening of the 18th,
some of our ironclad vessels forced their way yes-
terday into the Port St. George's. This morning dis-
embarkation commenced, when the naval vedettes
signalled that the enemy's squadron was in sight.
The Italian fleet put out to meet them, and a battle
commenced.

Admiral Persano hoisted his flag on the Affou-
datore, and bore down upon the Austrian fleet under

a heavy fire. The stern of the Austrian admiral's
vessel was destroyed. The fight as very severe.
We lost the ironclad R 6 d'ltalia, which the admiral
had left, and which sank from a collision with the
enemy at the commencement of the battle.
The ironclad gunboat Palestro caught fire, and
the commander and crew refused to leave the vessel.
She blew up amidst their cries of "Long live the
King ! Long live Italy !" No other vessel was lost
or fell into the enemy's hands.

The admiral renewed the attack upon the Aus-
trian squadron, which retired to Lesina without
waiting for our fleet to come up, and the Austrians
continuing their retreat, the Italian squadron re-
mained mistress of the scene of action.

The damages sustained by the enemy are con
siderable.

Further intelligence is expected. The crew o
the Re d'ltalia were nearly all picked up by the
Vittorio Emanuele.

FLORENCE, July 21, Evening.
Further information received here from Lissa
reports that one Austrian man-of-war and two
steamers were sunk by the fire of the Italian
squadron.