Arafat urged to act for peace

'We will die for you,' children tell Arafat

US President George W Bush has urged Palestinian leader Yasser Arafat to use his new-found freedom to show leadership towards achieving peace with Israel.

A Palestinian state must be achieved by negotiating an end to occupation, but such a state cannot be based on a foundation of terror or corruption

George W Bush

He said there were now signs of progress following the end of the siege of Mr Arafat.

But despite Washington's part in brokering that deal, the White House indicated that Mr Bush had no plans to meet Mr Arafat.

In another initiative, the Americans announced that arrangements had begun for a Middle East peace conference to be convened in early summer involving the UN, Russia and the EU.

US Secretary Colin Powell said there was a window of opportunity - now was the time for prompt action.

In the West Bank, Mr Arafat left his Ramallah compound on Thrusday for the first time in a month to a rapturous reception from his supporters.

And despite the continuing stand-off in Bethlehem, a group of peace activists managed to get into the Church of the Nativity, taking food and cigarettes to those still trapped inside.

UN Secretary General Kofi Annan announced on Thursday that he was formally disbanding the mission to investigate the Israeli military incursion at the Jenin refugee camp.

A report by the watchdog Human Rights Watch said that there was no massacre at the end, as Palestinians have claimed, but that the Israeli army did commit war crimes.

'Balancing act'

Speaking after a summit with European leaders in Washington Mr Bush pledged support for the Palestinian people by helping to build institutions that would serve them, "a Palestinian state and its neighbours as well".

But in a stern warning to Mr Arafat he said such a state "must be achieved by negotiating an end to occupation" and could not be "based on a foundation of terror or corruption".

Mr Bush wants more action from Mr Arafat

The American leader, however, also urged Israel not to out prevent Mr Arafat from returning to the Palestinian territories should he decide to travel abroad.

Speaking earlier, presidential spokesman Ari Fleischer made it clear there would, for the time being, be no welcome at the White House for the Palestinian leader.

"Yasser Arafat has not yet earned his trust," he said.

Issue of trust

Mr Arafat's first stop on leaving his compound was the local hospital where he said prayers at the graves of a number of people who died during Israeli incursions.

Scores of children across the road called to him: "We will sacrifice our lives for you".

The Israelis will not guarantee to let Arafat return if he goes abroad

But the BBC's Paul Adams says that, while Mr Arafat's popularity among his own people may have soared, none of this means that Israeli Prime Minister Ariel Sharon is planning to sit down and talk peace with him.

Mr Sharon's office said on Thursday that a captured leader of the Palestinian uprising, Marwan Barghouti, had told Israeli interrogators that Mr Arafat personally approved weapons funding for attacks against Israelis.

However Palestinian officials have consistently denied that Mr Arafat approved such attacks against Israel.

Food aid

One of Mr Arafat's first comments after being released was to appeal to the world to help end the confrontation at Bethlehem.

More than 200 people have been trapped inside the church - which Christians say marks the birthplace of Jesus - for four weeks.

They include about 30 armed Palestinians wanted by Israel.

One Palestinian was killed and at least two others wounded in an exchange of fire outside the church on Thursday.

The number of casualties at Bethlehem rises

Later, a group of 10 people and a photojournalist - belonging to the International Solidarity Movement in Bethlehem - defied Israeli snipers and a tank in Manger Square to run across to the church with food supplies.

Siege lifted

Mr Arafat had been penned in Ramallah since December. Israel intensified its operations against him on 29 March when troops took over most of his headquarters compound.

Israeli forces withdrew from the town in a deal that saw six Palestinians wanted by Israel handed over to US and British custody.

But the army has continued operations in the West Bank, arresting more than 100 Palestinians in raids on a refugee camp and in the town of Tulkarm.