A resolution adopted by around 100 PLO leaders following three days of talks, asserted that the ``state of Palestine with Jerusalem as its capital is an existing fact based on the natural rights of Palestinians''.

But the leaders, members of the PLO central council, decided to put off until June any decision on whether to simply proclaim the state or pursue negotiations with Israel on their goal of independence in the West Bank and Gaza Strip.

In the interim, the council formed several committees to prepare aspects of statehood, notably by drafting a constitution and setting down ground rules for new national elections.

The PLO central council, the second-highest Palestinian decision-making body, will reconvene in early June to study thesituation in light of the Israeli election results.

Thursday's compromise, proposed by PLO chief Yasser Arafat, satisfied demands by the US and other governments that the Palestinians refrain from declaring their state on May 4, the target date set down in the Oslo interim autonomy accords for reaching a final peace settlement with Israel.

But it appeared above all designed to avoid giving Israel's right-wing Prime minister, Benjamin Netanyahu, fodder for his campaign for re-election in May.

Netanyahu has threatened to annex parts of the West Bank and Gaza Strip still under Israeli control if the Palestinians unilaterally declare statehood and even before the PLO decision was formally announced on Thursday he was claiming victory for his hardline stance.

``After a whole year of Arafat's threats to create a Palestinian state on May 4,he gave in, and he did this because he knows that we won't stand for it, that for as long as I'm Prime Minister there will be no Palestinian state and no division ofJerusalem,'' Netanyahu had said on Wednesday night.

Netanyahu charged a government run by his rival for Prime Minister, Labor Party chief Ehud Barak, would cave in to Palestinian demands and cede all territories occupied in 1967.

In remarks to the council on Thursday, Arafat accused Netanyahu of plunging the peace process into limbo during his three years in power by ``not respecting signed agreements and adopting an aggressive policy against the Palestinian people''.

The council resolution for its part vowed to pursue ``the option of peace as a strategic choice''.

Netanyahu has held up implementation of most elements of the Oslo accords he inherited from an earlier, Labor Party government, and in December suspended an accord he himself signed promising to turn more West Bank land over to Palestinian rule.

The PLO resolution lashed out at the expansion of Jewish settlements in the occupied territories and Netanyahu's attacks on Palestinian institutions in East Jerusalem and called on Palestinians to``confront (these policies) by all means''.

Responding to disenchantment among Palestinians with both the failure of negotiations with Israel and abuses committed by Arafat's government, the council vowed to ``deepen democratic practices and the rule of law in Palestinian society''.

Many Palestinian figures, including members of Arafat's own Fatah movement, had called on the PLO council to press ahead with the statehood declaration and opposition groups were quick to criticise the decision to postpone it.

``We will continue to press for the proclamation of a state at the earliest possible date,'' said an official of the leftist Democratic Front for the Liberation of Palestine, one of the two main PLO opposition factions.

``We are absolutely opposed to the resolution which stresses negotiations (with Israel) while we believe the strategy of the Palestinian people should be resistance rather than negotiations,'' said a leader of the largest Opposition group, the Islamic Resistance Movement(Hamas).

But the council, noting that even Hamas representatives attended this week's session, insisted ``our people are united in facing the difficult circumstances and those who bet we will split will be disappointed.''

Us welcomes decision
Washington: The United States on Thursday lauded the decision to delay until at least June the planned declaration of independence. ``We welcome the decision,'' State Department spokesman James Rubin told reporters. ``We've said that we think it's very important for neither the Palestinians nor the Israelis to pursue unilateral acts or declarations.''

Washington is strongly opposed to either side in the process taking what it terms ``unilateral acts'' such as the threatened statehood declaration or the increase of Israeli settlements on the West Bank.