PALESTINIAN officials last night rejected any removal of their leader, Yasser Arafat, as a condition for statehood, as proposed by the United States president, George Bush, in a speech scripting a path to Middle East peace.

“Palestinian leaders don’t come from parachutes from Washington or from anywhere else. Palestinian leaders are elected directly by the Palestinian people. President Yasser Arafat was directly elected in a free and fair election,” a cabinet minister and chief negotiator, Saeb Erekat, told CNN. “The world and President Bush must respect the democratic choice of the Palestinian people.”

Mr Bush, in a long anticipated address charting a road map to Middle East peace, told Palestinians they must elect a new leadership “not compromised by terror” to win an independent state in the West Bank and Gaza Strip.

“Terror” referred to suicide bombings by Palestinian militants that have killed scores of Israelis during a 21-month uprising against occupation of territory captured by Israel in the 1967 Middle East war.

The speech came as the Israeli army confined about half a million Palestinians to their homes with curfews imposed by troops and tanks standing guard over towns in the West Bank and Gaza Strip.

A statement issued by the office of the Israeli prime minister, Ariel Sharon, echoed US calls for “genuine reforms and a new leadership” in the Palestinian authority as a way of moving forward. A spokesman, Raanan Gissin, said that when Palestinians chose Mr Arafat, they chose a policy of terror that sent suicide bombers into Israel. “If they want to choose the road to peace, they know exactly what they have to do,” Mr Gissin said. “It’s not for the United States to decide who their leader will be, but it is for the Palestinian people to decide which road they want to lead themselves to.”

The Israeli communications minister, Reuven Rivlin, said Israel was pleased with the speech, but rejected the concept of a provisional Palestinian state. He said Mr Bush had expressed a “vision of bringing the Palestinian people to democracy and reform, and then to negotiate”. Mr Rivlin, a close ally of Mr Sharon, said that according to the Bush formula, the first steps were up to the Palestinians, to reform their administration and “get rid of … terrorists who live there”.

Mr Arafat said yesterday that Mr Bush had made “a serious contribution” to Middle East peace. In a statement issued by the official Palestinian news agency he skirted Mr Bush’s clear calls for an end to a leadership tainted by terror.

“President Arafat and the Palestinian leadership have welcomed the ideas presented by President Bush. The president [Mr Arafat] and the cabinet view the ideas as a serious contribution to pushing the peace process forward,” the statement said. “The leadership hopes to discuss the necessary details to secure the success of these ideas through direct and bilateral meetings with the American administration and with the consultation of the quartet and the Arab brothers.”

The so-called “quartet” is made up of US, European Union, Russian and United Nations representatives trying to lay the groundwork for a new Middle East peace conference after 21 months of Israeli-Palestinian bloodshed.

The Palestinian information minister, Yasser Abed Rabbo, last night welcomed the ideas in Mr Bush’s speech and called for more detail.

He also said international intervention to make Israel withdraw from Palestinian towns was necessary to carry out democratic reforms and elections considered essential by Israel and the United States for Palestinian statehood.

Mr Bush said a halt to Jewish settlement building in the Palestinian territories was necessary to lend momentum to a peace accord.

In Cairo, Randa Ashmawi, a newspaper analyst, said: “It’s evident that his [Mr Bush’s] speech takes into account the pressure of the Jewish lobby inside the United States. It was very much pro-Israel and put Israel in a very comfortable situation – especially when he talked about the need for a new Palestinian leadership.

“I think Arabs were expecting a more detailed timetable than the three years he mentioned and a more flexible plan.