We welcome the positive positions taken by President George W Bush and other leaders who have called for the establishment of the Palestinian state

Yasser Arafat

The American secretary of state said Washington was sending a "powerful signal" to the world that it sought a new Middle East where Israel and the Palestinians could live side by side in their own states.

He gave no indication of what the United States had in mind.

Mr Powell also told reporters that sooner or later President George W Bush would meet Mr Arafat, although the president decided not to hold discussions with the Palestinian leader over the weekend.

Diplomatic round

In a speech to the UN General Assembly on Saturday, Mr Bush said Washington was willing to support the idea of a Palestinian state alongside Israel.

Correspondents say his remarks have triggered an energetic new round of diplomacy.

After his separate meetings with Shimon Peres and Yasser Arafat, Mr Powell also held talks with Russian Foreign Minister Igor Ivanov, EU foreign policy adviser Javier Solana and UN Secretary General Kofi Annan.

A short statement issued after the talks said the four would continue working with the Israelis and Palestinians to help implement a peace agreement.

This, they said, should be based on recommendations set out by George Mitchell, the former US senator who called for a ceasefire, a cooling-off period and then a return to peace negotiations.

One official said the Mitchell Report was the only road map to peace in the Middle East and the challenge was to find a way of encouraging the Israelis and Palestinians to start following this route.

Significant step

In his speech to the General Assembly on Sunday, Mr Arafat praised President Bush's remarks as a significant step on the path towards ending the conflict and the establishment of peace in the Middle East.

Mr Bush spoke of the idea of two states

But he also called for renewed international engagement in the peace process and the deployment of international monitors - something Israel and the United States have so far opposed.

"The current Israeli Government continues the aggression against the Palestinian people," Mr Arafat said.

Palestinian delegates have not concealed their disappointment that Mr Bush refused to meet them.

But they have welcomed what they see as the growing international acceptance that they are entitled to an independent state.