PALESTINIAN Prime Minister Ahmed Quriea withdrew his resignation yesterday after Yasser Arafat granted him some power to carry out reforms, easing a paralysing leadership crisis, officials said.

Palestinian factions have failed to unite behind a comprehensive truce offer to Israel after militants refused to agree to it at a meeting in Cairo.

ISRAEL responded defiantly yesterday to unusually sharp criticism by US President George W Bush of a barrier it is building through Palestinian areas in the West Bank.

ISRAEL and the US appeared yesterday to have resigned themselves to pursuing peace with a new Palestinian government despite objecting to President Yasser Arafat’s continued clout in security affairs.