[Arafat] accepted [the US plan] with his interpretations and principles

PLO 's Washington representative

"What that means is that both sides have now accepted the president's ideas with some reservations, and that represents a step forward," White House spokesman Jake Siewert said.

Earlier the Palestinian Liberation Organisation representative in Washington, Hassan Abdel Rahman, said Mr Arafat's acceptance was subject to the Palestinian leader's own "interpretations and principles".

Mr Arafat is due to discuss the issue with Arab foreign ministers in Cairo on Thursday after holding three hours of meetings with President Bill Clinton earlier in the week.

Aides put a positive spin on Arafat's White House talks

Palestinian officials have previously insisted that proposals to break the deadlock presented by Mr Clinton fall a long way short of their requirements on key issues - such as sovereignty of Israeli-occupied areas and the right of return of millions of Palestinian refugees.

Mr Clinton briefed Israeli Prime Minister Ehud Barak during a 45-minute phone conversation on Wednesday, after which Mr Barak called an urgent meeting of top ministers, Israel Radio said.

Tough talk

Israeli ministers have stepped up the bellicose rhetoric, saying no Palestinian was immune from Israeli reprisal attacks.

Deputy Defence Minister Ephraim Sneh said Israel would continue with its policy of assassinating Palestinians suspected of involvement in attacks on Israelis, including those serving in Mr Arafat's Palestinian Authority.

Ehud Barak: Telephone briefing from Clinton on Wednesday

"If anyone has committed or is planning to carry out terrorist acts, he has to be hit," he told Israel army radio.

Palestinian minister Hassan Asfour described the comments as "confirmation of the true face of the Barak government".

"This government has opted for crime and military oppression in a desperate attempt to impose its political logic on our people," Palestinian radio quoted him as saying.

Reported American proposals

Israel to concede sovereignty over much of East Jerusalem and the Al-Aqsa mosque Palestinians give up the right of return for Palestinian refugees Palestinian state on 95% of the West Bank and 100% of the Gaza Strip

While the Washington talks were in progress, Israeli tanks exchanged fire with Palestinian police near the West Bank town of Ramallah. One policeman was wounded.

Israel radio said the Israeli army closed major roads in the Gaza Strip on Wednesday, cutting the territory into three parts.

It said Palestinian forces fired at the Netzarim Jewish settlement overnight, but there were no reports of casualties.

More than 350 people, mostly Palestinians, have been killed since the Palestinians launched their uprising three months ago.

Mr Barak has said he does not believe Mr Clinton can broker a peace agreement before his presidential term ends.

El Al attack

The blast damaged the airline's Zurich office

There has been an explosion outside the offices of the Israeli airline, El Al, in the Swiss city of Zurich, causing damage but no injuries.

Police said it was probably triggered by a small explosive device.

A group calling itself "For a Revolutionary Perspective" - described by the authorities as left-wing extremists - said it carried out the attack in a bid to halt what it called massacres in Turkey, Kurdish areas and Palestine.

The same group is believed to have carried out similar small explosions last year, including one at the centre in Davos where the World Economic Forum is held.