He has retracted an earlier statement with references to the use of violence in the occupied territories, and backed away from plans to unilatarally declare statehood in the West Bank.

A spokesman for Israeli Prime Minister Binyamin Netanyahu said he considered the retraction to be acceptable.

But he did not say whether the suspended troop withdrawal from the West Bank would take place immediately.

The pull-back is one of the conditions of the Wye accord, as is a pledge not to undertake any "unilateral action".

Commitment to peace

The BBC's Paul Adams: Israeli cabinet decision on withdrawls due tomorrow

Mr Arafat's retraction came at a news conference with visiting German President Roman Herzog in Jericho on Tuesday.

Palestinian children in Nablus

He said any problems would be resolved through peaceful methods and negotiation, "and not in any other way".

He added: "We will continue to co-operate to confront any violence and the use of force.

"Peace in the Middle East is our strongest commitment."

Mr Binyamin Netanyahu welcomed the comments, but did not confirm whether troop withdrawals would now start.

"I consider positive the remarks by (Yasser) Arafat in which he pledged to resolve disputes through negotiations, renounce violence and co-operate with Israel in fighting violence," the prime minister told a public meeting.

It is now up to the Israeli cabinet to make a final decision on withdrawals on Wednesday.

Arafat's weekend warning

The latest stage in the war of words surrounding the Wye accord began at the weekend.

Mr Arafat warned Israel that Palestinian rifles were ready to defend an independent West Bank with Jerusalem as its capital.

Mr Netanyahu is considering his next move

On Monday, Mr Netanyahu responded, telling Israel's parliament that the troop withdrawal would not go ahead until Mr Arafat retracted the statement "publicly and unequivocally".

He also demanded a further pledge to crack down on Palestinian terrorism.

That evening the Palestinian leader responded by reiterating that peace was "a strategic choice" for the Palestinians.

But he stopped short of explicitly retracting his earlier statements or renouncing the threat to unilaterally declare a state.

Mr Netanyahu was only "half satisfied" with these assurances and was waiting for a more categoric renunciation of violence.

This now appears to have arrived, although Palestinians are still unhappy with comments from Israeli Foreign Minister Ariel Sharon, which they say break the Wye agreement.

He called for Jewish settlers to seize more land in the West Bank to stop it falling into Palestinian hands.

Envoys' obstacles

Our State Department Correspondent, Richard Lister, says two senior US envoys in the region are currently struggling to do their jobs.

They are supposed to help the Wye agreement get off the ground, but instead are having to focus on limiting the damage done by the war of words.

Meanwhile, the Israeli parliament is set to vote on Tuesday on the peace deal.

The parliament is expected to approve it, mainly because of support from opposition parties.