What will matter is what we see on the ground and the pace of progress in achieving the goals the Palestinians themselves have outlined

Lynn Cassell, US State Department

Despite pressure from reformers for deeper political changes, Mr Arafat's cabinet won the backing of 58 deputies, with only 18 voting against it in the Legislative Council.

Reformers in parliament had been asking for more transparency and professionalism in a leadership dominated by Mr Arafat's veteran aides. But the BBC's Barbara Plett, in Ramallah, says he appears to have done little to accommodate their demands.

In September, the cabinet was forced to resign after being threatened with a vote of no confidence by the Legislative Council.

Washington was reported to be "unimpressed" by the leadership changes.

"What will matter is what we see on the ground and the pace of progress in achieving the goals the Palestinians themselves have outlined," State Department spokeswoman Lynn Cassell was quoted as saying by the French news agency AFP.

Arafat loyalists

In Mr Arafat's new cabinet the average age is about 60. It is made up disproportionately of outsiders - officials who came back from exile with Mr Arafat, not the home-grown leadership of the first Palestinian uprising, our correspondent says.

Mr Arafat says Palestinians only object to Israeli occupation

The reformed cabinet is reduced from 21 to 19 members, and there are four new ministers for health, the interior department, justice and prisoners affairs.

Our correspondent says he dropped a number of ministers accused of corruption and mismanagement.

Mr Arafat has been arguing for a show of national unity in the face of pressure from Israel and America.

Crucially, he won the backing of the leadership of his dominant Fatah faction, which made it more difficult for the reformers, most of whom come from Fatah's younger generation.

The new cabinet will serve until presidential and legislative elections on 20 January 2003.

Stalled peace process

Ahead of the confidence vote, Mr Arafat told the meeting that Palestinians did not object to Israel's existence, only to its occupation of Palestinian land.

"So here we extend our hand to you (Israel) in reconciliation and we extend the olive branch to resume the path that we began in Madrid and Oslo," Arafat said, referring to the peace talks that led to an interim accord with Israel in 1993.

He added: "We want to live as neighbours. Let us find a common ground for the security we desire, which you desire, for our common security."