Israel's vice premier said Sunday killing Palestinian President Yasser Arafat was an option in its threat to "remove" him as an obstacle to peace.

"Killing (him) is definitely one of the options," Ehud Olmert, a mainstream member of Prime Minister Ariel Sharon's cabinet, told Israel Radio.

"We are trying to eliminate all the heads of terror, and Arafat is one of the heads of terror," Olmert said.

Palestinian chief peace negotiator Saeb Erekat said in response: "This is the thinking and action of the mafia -- not a government."

Israel's security cabinet decided to "remove" Arafat after two suicide bombings killed 15 Israelis on Tuesday, the latest surge of violence in a three-year-old Palestinian uprising for statehood. But it did not say when it would move against him.

The vague wording left room for several options, including exiling, isolating or killing Arafat -- a proposal which media reports said hardline Defense Minister Shaul Mofaz raised but Sharon shot down.

The Israeli threat sparked an international outcry, with Washington -- Israel's main ally -- joining in a chorus of calls not to expel Arafat, a veteran symbol of Palestinian aspirations for independence.

Tens of thousands of Palestinians rallied Saturday in support of Arafat, many vowing to sacrifice their lives at his battered headquarters in the West Bank city of Ramallah.

Arafat, effectively confined to the "Muqata" compound for the past 21 months by Israeli army roadblocks and patrols in Ramallah, addressed them via cell phone hookup, proclaiming support for a "peace of the brave."

With U.S. backing, Israel blames Arafat for fomenting militant violence -- a charge he denies -- and calls him an obstacle to peace.

Arafat said Saturday he was still committed to a U.S.-backed "road map" to Palestinian statehood by 2005, a plan that seems dead in the water following the recent bloodshed.

ISRAELI SECURITY CHIEF FAVORS KILLING ARAFAT-REPORT

Israel's Maariv newspaper reported Sunday that Avi Dichter, chief of the Shin Bet domestic security service, said in internal discussions it would be better to kill Arafat rather than expel him.

Dichter, the report said, believes Arafat's death would have a short-term effect, touching off protests in the Palestinian territories that would last only several weeks, whereas exile would return him to the world stage and win him sympathy.

Erekat told Reuters that Israel was "determined to kill President Arafat and throw the Palestinians into chaos and anarchy."

The issue also mired Palestinian efforts to end a political crisis. Prime Minister-designate Ahmed Qurie has delayed plans to name a cabinet to replace that of Mahmoud Abbas, a moderate who quit accusing Arafat and Israel of undermining him.

Listing another Israeli option, Olmert raised the possibility of using troops and electronic jamming to isolate Arafat, 74, at his headquarters.

"He would be like a prisoner in a dungeon," Olmert said. "He'd receive his food ration twice a day but would not be able to meet with anyone, convene news conferences, give interviews, or speak on a cellphone or telephone."

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