The United Nations, the European Union and Russia have rejected Washington's call to remove Palestinian leader Yasser Arafat, and questioned its decision to place security for Israelis above all other goals in the region.

Chairman Arafat is the legitimately elected leader of Palestine, and while he is we will continue to maintain our relations with him

Igor Ivanov Russian Foreign Minister

At a meeting of the quartet in New York to draft a common approach towards Middle East peace, leading international representatives made clear their reservations over US policy in the region.

UN Secretary General Kofi Annan, Russian Foreign Minister Igor Ivanov and EU representatives met US Secretary of State Colin Powell as fresh violence erupted in the region.

Eight Israelis died and at least 20 were injured in an attack outside a Jewish settlement, an assault which indicated that Israel's re-occupation of Palestinian territories was failing to fulfil its stated aim of providing its citizens with security.

It was the first high profile meeting of the quartet since President George W Bush made a new Middle East policy statement last month, and it left the US clearly isolated on two key issues.

The US has rejected Arafat as a negotiator

While Mr Bush indicated that there should only be a Palestinian state after the Palestinians got rid of Mr Arafat - their democratically elected leader - Washington's quartet partners said they would continue to work with him.

"The UN still recognises Chairman Arafat and will continue to deal with him until the Palestinians decide otherwise," said Mr Annan at a news conference after discussions with Mr Powell.

His comments were echoed by Mr Ivanov and the Danish Foreign Minister, Per Stig Moeller, both of whom stressed the need to respect the sovereignty of the Palestinian people.

The foreign ministers of Jordan and Egypt, who met the quartet for separate round of talks, also criticised US attempts to sideline Mr Arafat.

"The issue is not the person of Mr Arafat, but the occupation." said Jordanian Foreign Minister Marwan Muasher.

Sovereignty for some

The group also clashed on when to start making moves to resolve the political and economic aspects of the conflict.

Mr Powell stood firm on President Bush's insistence that Israel should not have to make any concessions to the Palestinians - such as troop withdrawals or easing economic restrictions - until it was content with the security situation.

He also defended Israelis' right to act as they saw fit in response to violence.

"Israel is a sovereign country and will have to reach its own decisions," said Mr Powell. "Everything begins with creating a better sense of security."

Mr Annan condemned Tuesday's attack on an Israeli bus near the entrance to the ultra-Orthodox Jewish settlement of Emmanuel.

But he insisted that Palestinians needed to be offered hope if violence was to end, stressing the need to improve living conditions and make steps towards the resumption of negotiations for a Palestinian state.

"We all agree that we should work on security but even if the security track gains some traction, unless we show some progress on the other two tracks, they will not work, that will also fail."

The quartet did however agree that a task-force would meet at the end of August to discuss economic assistance to the Palestinians, and that leaders would meet for a fresh round of talks at the UN General Assembly in September.

They also declared that they wanted to send a CIA-led team of international intelligence experts to help with the reform of Palestinian security bodies.

But the US rejected a suggestion by EU foreign policy chief Javier Solana that a mission would be sent out in the next two weeks.