Following Thursday's suicide bombing in Jerusalem, Israel has taken over Orient House - the building which had served as the Palestinian Authority's headquarters in Jerusalem.

The Palestinians have denounced the action as a violation of the Oslo peace accords.

Orient House has come to symbolise the Palestinian claim to Jerusalem. As such, its existence is deeply important for Palestinians and passionately resented by many Israelis.

This old and rather charming building in East Jerusalem - built of the pale stone so characteristic of old Jerusalem - has long been in the possession of one of the city's best-known Palestinian families, the Husseinis.

For many years it was a hotel. But in 1991 Faisal Husseini, a prominent Palestinian politician, decided to put it to a new use.

It had fallen into decay, so he refurbished it and turned it into an unofficial political bureau.

Toehold in Jerusalem

Its status received an important boost as the Oslo peace process got under way in 1993.

An Israeli flag flying over Orient House

The peace process led to the creation of Yasser Arafat's Palestinian Authority in Gaza and the West Bank. But Arafat saw it as a vital to have a toehold in Jerusalem.

Orient House became the headquarters of the Palestinian Ministry of Jerusalem Affairs, with Faisal Husseini as its head.

Until his sudden death from a heart attack in May this year, the man and the building played an important role in the Israeli-Palestinian saga.

The transformation of Orient House was, from the start, intensely controversial among Israelis.

One right-wing politician, Rafael Eitan, called it "a Palestinian state in the middle of Jerusalem".

Secret pledge

Furious that a number of visiting foreign dignitaries - for example, from the European Union - made a point of visiting Husseini at Orient House, successive Israeli governments did their utmost to close it down.

Faisal Husseini used Orient House to give the Palestinians a political toehold in Jerusalem

But their repeated efforts - aptly described by one historian as "the siege of Orient House" - were unsuccessful.

To the fury of right-wing Israelis, it emerged that in October 1993 Shimon Peres - then, as now, Israel's foreign minister - had made a secret pledge that Orient House would be allowed to function unhindered.

The pledge was made in a letter to the Norwegian foreign minister, who was at the time a key mediator between Israel and the Palestinians.

Peres wrote: "All the Palestinian institutions of East Jerusalem... are performing an essential task for the Palestinian population. Needless to say we will not hamper their activity."

Far-reaching consequences

When the letter became public the following year, it produced a storm of protest in Israel.

Mr Peres, deeply embarrassed, could not deny the letter's existence - or the fact that it amounted to a formal commitment by the Israeli government.

Now Israel's Prime Minister Ariel Sharon has found a pretext to do what his predecessors had been unable to do.

He has evicted the Palestinian staff from Orient House, sealed the building and replaced the Palestinian flag that had fluttered above it with the Israeli one.

It is an action which is bound to have far-reaching consequences.