JERUSALEM - Israel's security Cabinet labeled Palestinian President Yasser Arafat "a complete obstacle to any process of reconciliation" and declared Thursday night that "Israel will work to remove this obstacle in a manner, and at a time, of its choosing."

Thousands of men, responding to entreaties from Palestinian Authority officials to come to Arafat's defense, flooded into his headquarters in the West Bank city of Ramallah. Pro-Arafat demonstrations marked by cheering and gunfire erupted in other West Bank cities and the Gaza Strip. A top Palestinian official labeled the Israeli statement "a declaration of war."

Earlier the 74-year-old Arafat had vowed: "This is holy land. No one can kick me out."

But the vagueness of the Israeli declaration, along with comments by government officials, indicated that no military operation was imminent. Internationally, both friends and foes of Israel strongly oppose such a move. And Israeli security officials remain unconvinced that the rewards outweigh the potential risks.

The statement came as the government of Prime Minister Ariel Sharon faces growing pressure to act after a pair of suicide bombings bloodied Israel on Tuesday. Some top Cabinet officials called for Arafat's immediate removal to an Arab country. Others suggested he be killed.

By that standard, the Cabinet statement was more of a warning shot. Analysts said it reflected divisions within the Israeli government; it also conveyed Sharon's awareness that while the Bush administration has supported Arafat's isolation, it has not changed its view that forcefully moving against him would do more harm than good.

"The government is under extreme pressure," said Shlomo Avineri, a professor of political science at Hebrew University. "On the one hand it has the U.S. peace plan, the road map, about which Israel has doubts ... but the Americans want to try.

"But there is a lot of fear, a lot of anger. People say, `Maybe you cannot give us peace on Earth but at least provide security in the downtown,' The government has to do something, and the regular tit-for-tat is not the right answer. This gives them some breathing space."

The Cabinet move is likely to fuel emotions already raw over a recent surge of violence. The suicide bombings Tuesday in Jerusalem and outside Tel Aviv left 15 victims dead and scores wounded. Attempted Israeli assassinations and arrests of Palestinian militants, including a bold strike Saturday on the spiritual leader of Hamas, have killed several bystanders and sent dozens to hospitals in the Gaza Strip.

Ahmed Qureia, struggling to put together a government after Arafat chose him this week as the new Palestinian prime minister, said expelling Arafat would destabilize the Middle East.

"It would eliminate any possibility for peace in the area and would eliminate any possibility to achieve security and also eliminate any possibility for me to form a Palestinian government," Qureia said. "We call upon all wise people in the world to stop this crazy decision."

Qureia is under a great deal of pressure himself. Looked to by the Americans to move quickly against militant groups and win some trust, Qureia had hoped to form an emergency government Thursday with a scaled-down Cabinet. Instead, after discussions with Arafat and other Palestine Liberation Organization leaders, Qureia decided to form a full government, which could take several more days.

The Palestinian leadership also said it would form a national security council to supervise the various security forces. The decision moves toward satisfying a demand made by Israel and the United States and addresses a key failure of the last government, headed by Mahmoud Abbas, who was unable to assert control over all the armed forces.

But Arafat will head the new security council, and Israel has rejected any Palestinian government in which Arafat plays a role.

"Israel is not interested in the question of the identity of the Palestinian prime minister," said the statement of the 11-member security Cabinet, which met after Sharon cut short a trip to India and returned home Thursday.

"However, Israel must underscore its position that it will negotiate only with a prime minister who acts immediately to dismantle and remove the terrorist organizations and fully upholds the other commitments that the Palestinian Authority has taken upon itself according to the road map," the statement said.

"Events of recent days have reiterated and proven again that Yasser Arafat is a complete obstacle to any process of reconciliation between Israel and the Palestinians."

Earlier in the day, Israeli troops, who have pinned Arafat down in Ramallah for most of the past two years, took over the Palestinian Authority Culture Ministry next door to Arafat's headquarters and occupied an uninhabited building offering prime vantage points into the complex.

Yet Sharon spokesman Raanan Gissin said the statement "does not mean that we are going to expel him tomorrow."

"The question is how best to remove this obstacle without causing further damage to the (peace) process," Gissin told CNN, declining to provide details of what Israel plans to do or when.

"I didn't say how," Gissin said of removing Arafat. "Let them worry. Let Mr. Arafat worry a little bit about the policies he's engaged in."

The Palestinian Authority foreign minister, Nabil Shaath, called the statement "a declaration of war."

"They are talking about killing or expelling the president of the Palestinian Authority, recognized by almost all the countries of the world, including the United States," Shaath said. "One should really look at removing obstacles from the other side. It is Israeli occupation that is the obstacle."

Israelis favoring expulsion, or something more permanent, say Arafat can neither be dealt with nor left on the scene to undermine any Palestinians who might rise up to replace him.

"The minute (Arafat) won't be here, other, more moderate forces can appear instead of him," Foreign Minister Silvan Shalom said on Israel Army Radio.

Critics have a long list of doubts.

Egyptian President Hosni Mubarak said Egypt would accept Arafat but warned Israel of disastrous consequences.

"Nobody can tell what would happen in the Palestinian territories if Arafat is expelled. Terrorism, violence will erupt everywhere," Mubarak said at a news conference.

Though senior defense officials have said the army has developed a plan for the operation, getting Arafat out alive could prove difficult in the face of his armed guards and his own stated willingness to die.

Greeting the thousands of supporters who flocked to his headquarters Thursday night, Arafat vowed to stay and said, "You are the ones who are capable of responding to this Israeli threat."

Even if he were plucked out of the West Bank alive, Arafat in exile could prove more troublesome to Israel than under what amounts to headquarters arrest in Ramallah.

For years Arafat was able to direct the PLO from afar. And his ability to withstand the Ramallah isolation and emerge with more grass-roots popularity and enough political clout to stare down a challenge from Abbas shows his instincts remain sharp.

Beyond that, many in Israel and its friends in the United States shudder at the thought of Arafat touring world capitals as a political exile and reborn Arab hero.

"We don't believe that dealing with Mr. Arafat through expulsion is going to be helpful at all," a State Department spokesman said, reiterating a message that U.S. officials have delivered to their Israeli counterparts several times in recent days. "It would just give him another stage to play on."

Some Israeli leaders are pushing for Israel to defy the United States if necessary. They liken Arafat to Osama bin Laden and Saddam Hussein and hint at a double standard.

"We are in a situation in which (American) approval for this, in case we asked for it, would be almost impossible to obtain," said Shalom, the foreign minister. "I think there are some situations in which we have to make decisions that are completely cut off from outside influence."

Political analysts said the decision Thursday showed that Sharon is not ready to do that just yet.

Avraham Sela, an Israeli professor of international relations, told The Associated Press: "It sounds like they're not entirely willing to commit themselves."

And Avineri of Hebrew University said: "The threat is a serious threat, and by doing this Israel is crossing a line. Maybe they have not crossed the red line but they have crossed a certain line."

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