Israeli forces still control the four main West Bank towns
Mr Powell is expected to use the occasion to demand specific steps from Mr Arafat to combat terrorism.
But the secretary of state has also issued his own statement expressing concern at the desperate humanitarian situation faced by Palestinians in the West Bank.
Issued in Arabic, Mr Arafat's statement made special reference to Friday's suicide attack in west Jerusalem which killed six Israelis.
It followed a US call for Palestinians to make a clear stand against terrorism and was broadcast on Palestinian TV, in line with US demands.
But Israeli sources were quoted by the AFP news agency as rejecting the statement, describing Mr Arafat as saying one thing and doing another.
"Such a condemnation is not worth anything coming from a man who is the top terrorist official," said Danny Ayalon, an aide to Prime Minister Ariel Sharon.
Mr Arafat's statement came hours after Israeli forces reportedly made new incursions into Palestinian territory on the West Bank.
The army moved into the towns of Arabe and Hashmiyah, near Jenin, and the village of Birqin, placing citizens under curfew.
Mr Powell meanwhile met church leaders in Jerusalem, who urged him to use his influence to help those trapped inside Bethlehem's Church of the Nativity.
More than 200 people, including a group of Palestinian gunmen, are being beseiged there by Israeli troops.
Palestinians trapped in the church say a 26-year-old civilian, Hassan Nasman, was shot dead by Israeli snipers on Saturday. The Israelis deny firing into the church.
'Crimes and massacres'
The Palestinian statement said Mr Arafat and his aides "firmly condemn operations targeting Israeli civilians, particularly the recent one in Jerusalem."
Detailed map of the West Bank operation It added that: "We firmly condemn the crimes and massacres committed by the Israeli occupation forces against civilians and Palestinian refugees at Nablus, the Jenin camp, the church in Bethlehem and other Palestinian zones in recent weeks."
The Palestinians have called for an international inquiry into the situation at Jenin refugee camp, where hundreds of Palestinians are reported to have been killed during the past week.
Israeli forces remain in control of four of the main Palestinian towns on the West Bank - Bethlehem, Ramallah, Jenin and Nablus.
Mr Powell's mission was thrown into crisis when a female suicide bomber detonated explosives at a bus stop on Jaffa Road, west Jerusalem, on Friday afternoon.
Earlier in the day, the secretary of state had been unable to persuade Prime Minister Sharon to provide a timetable for withdrawing his troops.
Israeli defiance
In an apparent rebuke to the Bush administration, Mr Sharon said: "Nobody will force upon us any decisions or resolutions that might affect our future."
Mr Sharon said he did not believe any agreement with the Palestinians was possible as long as Yasser Arafat remained their leader.
The al-Aqsa Martyrs Brigades, an armed group linked to Palestinian leader Yasser Arafat's Fatah faction, claimed responsibility for Friday's suicide attack in Jerusalem.
It was the second such attack on a bus in three days.
On Wednesday, nine people were killed and scores injured when a bomber blew himself up on a bus outside the northern Israeli town of Haifa.