After days of unrelenting international pressure, the Palestinian Authority leader finally bowed to demands that he allow Mahmoud Abbas to take office by dropping opposition to his Cabinet nominees.

The development paves the way for the Bush Administration to publish its Middle East “road map” — a step-by-step plan designed to culminate in the creation of an indepndent Palestinian state by 2005. President Bush has committed himself to publishing the plan as soon as Mr Abbas is confirmed in office.

Tony Blair expressed delight at the breakthrough. There was now “every chance that we can make progress in the Middle East,” he said. The Prime Minister, who has championed efforts to revive the peace process, had personally appealed to Mr Arafat to show flexibility.

After talking by telephone to Mr Bush, he said that there was now “a genuine commitment the world over” to make “a reality of the two-state solution — Israel confident in its security and recognised by the Arab world, and a viable Palestinian state”.

The US State Department said that the resolution of the Palestinian leadership crisis was an important step towards implementing a plan for a Palestinian state and would bring “a better situation for Israelis and Palestinians”. The road map would be published as soon as the Cabinet was approved by the Palestinian parliament, probably early next week.

The impasse was over Mr Arafat’s refusal to concede ground to Mr Abbas on the issue of reining in militants who attack Israel.

The Israeli Government of Ariel Sharon refuses to negotiate with Mr Arafat, whom it accuses of stoking the armed Palestinian uprising.

Mr Arafat disagreed with Mr Abbas’s proposals for clamping down on militant groups such as the al-Aqsa Martyrs Brigade, Hamas and Islamic Jihad, all of whom carry out suicide bombings against Israel.

In the event, Mr Arafat dropped his opposition to Mr Abbas taking charge of the security forces — a vital area for cracking down on militants — as his own Interior Minister. He also accepted Muhammad Dahlan, a pragmatist acceptable to Israel, becoming Minister for Internal Security.

The breakthrough came hours before a midnight deadline for Mr Abbas to form a government, and followed a day of intense mediation by Egypt’s head of intelligence, Omar Suleiman. Mr Abbas had already written his letter of resignation. He is now expected to present his Cabinet to the Palestinian Legislative Council early next week. Its approval is seen as virtually inevitable.

Mr Arafat conceded defeat after an unprecedented campaign of international pressure, which included telephone calls from European and Arab leaders and indirect communication from the Bush Administration.

The agreement was presented as a face-saving compromise. An Egyptian official said that Mr Arafat had backed down in exchange for guarantees on his personal safety and a promise that his isolation, imposed by Israel, would end.

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