Israel pulls back forces

Mr Arafat, right, met more than 30 envoys

The Israeli military is to withdraw from all areas under exclusive Palestinian military and civil control.

The BBC correspondent in Jerusalem says this amounts to a pullback of a few hundred metres, but the move is a hugely symbolic step designed to show Israeli goodwill.

There is an over-riding need to get ourselves organised against one of the greatest dangers that history ever met

Israeli Foreign Minister Shimon Peres

US President George W Bush welcomed the moves as a "glimmer of hope".

"We've had very positive developments in the Middle East today, the next step of course is to stay involved in the region, is to work with both the Palestinians and the Israelis to encourage them to seize the moment," he said.

Israeli Foreign Minister Shimon Peres told the BBC that last week's devastating attacks in the US had increased the urgency of making progress.

"All of us understand that there is an over-riding need to get ourselves organised against... one of the greatest dangers that history ever met," he said.

Israel's army earlier said it would suspend all "offensive operations" against the Palestinians.

Prime Minister Ariel Sharon gave the order just hours after Palestinian leader Yasser Arafat issued another strongly-worded order to his military commanders to secure a ceasefire on all fronts.

Mr Arafat's statement called for armed Palestinians to exercise maximum restraint even when they come under fire.

But militant Palestinian groups Hamas and Islamic Jihad are reported to have rejected the ceasefire.

The Israeli military is withdrawing

Sheikh Abdallah al-Shami, the Islamic Jihad leader in the Gaza Strip, told Reuters news agency that his movement would only stop attacks on civilians if the Israelis did the same and would attack military targets "wherever we can reach them".

And Hamas official Abdel-Aziz al-Rantissi said: "Hamas will not surrender and will not drop its weapons until occupation is removed."

US pleased

Mr Peres welcomed Mr Arafat's statements, saying that he had used a different style of language to previous occasions.

And he did so in Arabic so that all his people and commanders knew it came straight from him, the Israeli foreign minister added.

Mr Sharon has not pleased the US by comparing Mr Arafat to Osama Bin Laden

Israeli Foreign Minister Shimon Peres said talks between Israel and the Palestinians could start in a "matter of days" if the ceasefire holds.

Mr Sharon blocked long planned talks between Mr Arafat and Israeli Foreign Minister Shimon Peres on Sunday.

Correspondents say American officials were unhappy with Mr Sharon's description of Yasser Arafat as "our Osama Bin Laden".

Show of solidarity

Earlier on Tuesday, Mr Arafat held an unprecedented meeting in Gaza City with more than 30 international envoys, including representatives from the United States and the European Union.

In his statement on Tuesday, Mr Arafat said he had told US officials that he was ready "to put all our capabilities at their disposal, and to be part of the international alliance to put an end to terrorism against innocent and unarmed civilians".

UN diplomats say the Palestinians do seem genuine in wanting to enforce the ceasefire.

According to reports, the Palestinians, acting on Israeli intelligence, arrested a suicide bomber in the West Bank town of Nablus on Tuesday.

But on the West Bank, in Nablus, a Palestinian was shot dead when he failed to respond to orders to halt as his tractor approached an Israeli military post.

In Hebron, a Palestinian taxi driver's body was found at the scene of intense overnight gun battles between Palestinian gunmen and Israeli soldiers.