Mr Clinton chaired a signing ceremony in Washington on Friday, attended by the Israeli Prime Minister, Binyamin Netanyahu, and the Palestinian leader, Yasser Arafat.

The agreement was clinched after nine days and nights of intense negotiations that also involved King Hussein of Jordan.

The deal requires the Israelis to withdraw from a further 13% of the West Bank and to begin the release of Palestinian prisoners.

Peter Biles reports: Bigger challenge still to come

The Palestinians are to take action against militants, and to cancel the PLO charter's call for the destruction of Israel.

Analysts say these issues are minor compared to those that lie ahead - the status of Palestinian refugees, the control of Jerusalem and the shape of the final borders for Israel and the Palestinian entity.

Building on trust

Israeli government spokesman Moshe Fogel: "Real test of this agreement is in its implementation"

President Clinton said the agreement was designed "to rebuild trust and renew hope for peace".

"Both parties must now build on that trust, and carry out their commitments," he said.

Binyamin Netanyahu: Israel more secure

Israeli Prime Minister Binyamin Netanyahu said Israel and the entire region were more secure as a result of the deal.

He said negotiators had overcome tremendous challenges, which filled him with confidence that a final peace settlement could be met.

Palestinian leader Yasser Arafat said the deal showed the peace process was moving forward.

He said the Palestinians would never turn away from peace and that the days of confrontation and violence were over.

Palestinian representative Afif Safieh: "Tribute must be paid to the American administration"

He said the interim agreement was an important step for the development of the Palestinian people.

There was praise from all the speakers for King Hussein of Jordan, who was present to facilitate the talks despite serious illness.

"It has been a shot in the arm for me, what you have accomplished today," the King said at the signing ceremony.

Richard Lister: Neither side has everything it wanted from deal

US Secretary of State Madeleine Albright described the signing as "a new chapter in the pursuit of a permanent peace in the Middle East".

Washington correspondent Richard Lister says this is the beginning of an even more difficult phase of the peace process.

"The two sides will first have to overcome hostility to this interim agreement at home before opening discussions on Palestinian statehood and the future of Jerusalem," he said.

Spy threat to deal

Jonathan Pollard: Alleged to have spied for several countries

The signing of the agreement was held up for several hours after Mr Netanyahu asked the United States to release the convicted spy, Jonathan Pollard.

Mr Pollard was arrested in 1985 and jailed for passing military intelligence documents to Israel.

The Israelis were insisting on Mr Pollard's release as part of the peace deal.

The deadlock was broken when President Clinton agreed to carry out a review of the case.