Israel took a step toward expelling Palestinian leader Yasser Arafat but stopped short of carrying out its decision, reflecting stiff opposition from the United States.

Reacting to two suicide bombings by Palestinian militants that killed 15 Israelis, Israel's security Cabinet on Thursday declared Arafat "a complete obstacle" to peace, blaming him for the violence, and added, "Israel will work to remove this obstacle in the manner, at the time, and in the ways that will be decided on separately."

The wording left open the options of deporting Arafat, capturing him or killing him. A senior Israeli official, speaking on condition of anonymity, said the declaration was intentionally vague, designed to frighten Arafat and his backers. However, the Haaretz daily reported that when Defense Minister Shaul Mofaz talked of killing Arafat, Israeli Prime Minister Ariel Sharon asked him not to use that language.

The immediate effect was an outpouring of Palestinian support for the embattled leader, trapped in his battered office in the West Bank town of Ramallah for more than a year.

Arafat declared that no one would remove him and Palestinian officials warned that an expulsion would wreck all chances for peace. The United States publicly opposed deporting Arafat, though the Bush administration, like Israel, has declared a boycott on the Palestinian leader, charging he is tainted by terror.

Pro-Arafat demonstrations erupted all over the West Bank and Gaza. Thousands gathered in Gaza City, firing rifles into the air as loudspeakers relayed comments by Arafat. Marchers carried Arafat posters and flags, chanting: "Sharon, listen well, we will send you to hell."

About 5,000 demonstrated in Nablus, the largest city in the West Bank.

Arafat's isolation and the escalating conflict with the Israelis have alternately bolstered and eroded Arafat's support. Tuesday's suicide bomb attacks, claimed by the violent Islamic Hamas, came amid Israeli strikes at Hamas leaders that gained sympathy among Palestinians for the militant group.

Israel charges that Arafat is at least indirectly responsible for nearly three years of Palestinian attacks, as he controls tens of thousands of armed Palestinian police and security agents but has not disarmed or neutralized the militant groups.

Defying the Israeli decision, Arafat appeared at the entrance to his sandbagged Ramallah office, carried aloft by bodyguards, smiling broadly at thousands of backers who rushed to his West Bank headquarters to protect him.

"The leader is Abu Ammar," the crowd chanted, referring to Arafat by his nom de guerre.

Using a bullhorn, Arafat recited a passage from the Quran, the Muslim holy book, about being steadfast in the face of an oppressor. He also said: "We are on sacred land, and we will protect our holy Christian and Muslim places."

He then led the crowd in a chant, waving his finger in rhythm: "To Jerusalem, to Jerusalem, to Jerusalem." Both Israelis and Palestinians claim the city as their capital.

As the three-hour Israeli security Cabinet session was in progress, Arafat told reporters, "This is my homeland. No one can kick me out."

The Israeli decision came as Palestinian premier-designate Ahmed Qureia was putting together a Cabinet. Arafat picked Qureia to replace Mahmoud Abbas, who resigned Saturday. Qureia said expelling Arafat "will eliminate any possibility for me to form a Palestinian government."

"We call upon all wise people in the world to stop this crazy decision," he said.

U.S. Ambassador Daniel Kurtzer was to meet Israeli Defense Minister Shaul Mofaz Friday. Mofaz is reported to be pushing for Arafat's expulsion. Israel Radio reported that Kurtzer would relay stiff U.S. opposition.

State Department spokesman Richard Boucher said, "We think that it would not be helpful to expel (Arafat) because it would just give him another stage to play on."

Palestinian negotiator Saeb Erekat, who is close to Arafat, warned that deporting the veteran leader would destroy moderates and empower extremists. "If this decision is carried out, I don't know when the next Palestinian would even be able to say the word 'peace,'" Erekat said.

The Israeli decision meant that Sharon and Mofaz could decide on expelling Arafat without reconvening the Cabinet.

Security officials said the army has begun preparations for Arafat's quick ouster. Israeli media reported several months ago that under an army contingency plan, Arafat would be flown out of Ramallah by helicopter, and that Israeli commandos have scouted locations for a drop-off.

Israeli troops earlier Thursday set up positions on two tall buildings overlooking Arafat's headquarters, and F-16 warplanes repeatedly flew overhead.

However, experts said it would be nearly impossible to capture Arafat alive. Arafat has said repeatedly that he expected to be a "martyr," the term Palestinians use for those killed in the conflict with Israel.

A six-week unilateral Palestinian cease-fire collapsed last month with renewed Palestinian suicide bombings and Israeli strikes against Hamas leaders. Now, Israel formally rejects the idea of a truce.

"Terror will be stopped only after the terror organizations have been dismantled and liquidated," read the Cabinet statement.

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