Mr Arafat's broadcast followed the explosion of a car bomb in a Jerusalem market, killing two people and injuring more than 20. He said the Palestinian security services would make a 100% effort against terrorism.

The Israeli government suspended consideration of ratifying the latest peace agreement on news of the attack.

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An official statement, broadcast on Israel Radio, said the government wanted guarantees from the Palestinian Authority that it was fighting a resolute war against terrorism.

But in Washington, President Clinton urged both Israel and the Palestinians to press ahead with the peace process, despite the bomb attack.

Busy market target

The bomb exploded as the Israeli cabinet was debating the American-brokered deal under which Israel would return some more occupied territory to the Palestinians, in return for Palestinian commitments on security.

The blast ripped through the Mahane Yehouda market in prodominantly Israeli West Jerusalem. In July, several Israelis were killed at the same location by suicide bombers.

On this occassion, the blast came as many people were out shopping before the Jewish sabbath, which begins on Friday.

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Eyewitnesses said a car exploded after crashing into a market stall, next to a bus.

Israeli police said the two dead were suicide bombers belonging to the Islamic militant group, Hamas. But later, the Israeli Justice Minister, Tsahi Hanegbi, said the bombing was almost certainly carried out by the Islamic Jihad group.

At the time of the signing of the recent peace agreement, Mr Arafat pledged to make "a 100% effort" to combat violence, but has repeatedly stressed that he cannot guarantee 100% results.

A Palestinian spokesman, Hassan Asfour, has condemned the bombing, saying all his colleagues in the Palestinian Authority were against terrorist attacks, whose only aim was to destroy the peace process.

Another Palestinian official, Nabil Abu Rudeina, called on the United States administration to intervene immediately to help implement the recent agreement between the two sides.

The US President, Bill Clinton, condemned the bombing. He said the "outrageous and cowardly" act should not derail the Middle East peace process.