TEL AVIV -- In the shadow of last week's terrorist attacks, U.S. Secretary of State Colin Powell may be on the brink of achieving the breakthrough in the Middle East that has eluded him for months. Yesterday, under heavy U.S. pressure, the Israeli government and the Palestinian Authority each directed their forces to cease firing.

As Israeli tanks and troops pulled back from positions around the West Bank cities of Jericho and Jenin, Mr. Powell said: "We have seen some promise. Let's hope that we can see some developments that will continue this sense of promise."

The conflict between the Israelis and Palestinians has jeopardized U.S. efforts to recruit Arab and Islamic nations into an international coalition against terrorism.

Almost from the moment of the attacks on the United States, the Bush administration has been trying to persuade the two sides to get back to the bargaining table.

Yesterday, the ceasefire began to take hold after a round of telephone calls involving Mr. Powell, Palestinian leader Yasser Arafat, Israeli Prime Minister Ariel Sharon and Israeli Foreign Minister Shimon Peres.

Mr. Arafat was the first to reveal what was happening publicly. He summoned a group of diplomats in Gaza City to tell them he had ordered his security forces "to act intensively in securing a ceasefire on all our fronts."

For the first time, he said he had directed his forces not to return fire even in self-defence.

Mr. Arafat made his move almost a year after the beginning of the latest Palestinian intifada, which has been marked by frequent terrorist attacks against Israelis as well as fighting with the Israeli military.

However, in the suddenly transformed international environment, Mr. Arafat risked diplomatic isolation if he did not distance himself from terrorism.

He has even said in recent days he would like the Palestinian Authority to join the U.S.-led coalition.

Soon after Mr. Arafat's statement yesterday, the Israelis responded, saying they were suspending all offensive military operations as a test of Mr. Arafat's good faith.

Speaking in Washington, Mr. Powell said the Israelis had agreed to create buffer zones to reduce the possibility of renewed clashes. He also said he had encouraged Israeli and Palestinian commanders to talk with one another to ensure the ceasefire holds.

The United Nations envoy in the region, Terje Roed-Larsen, described the ceasefire as "light at the end of the tunnel," but warned that the situation is terribly fragile.

"If there is a bomber loose in Israel and his bomb blows off within a few days, we would be back to square one."

In an apparent attempt to reassure potential allies in the Arab world, Mr. Powell told the Arabic-language television station Al-Jaziera that, although Israel would be part of the antiterrorism coalition, he does not foresee it playing a military role.

Mr. Powell has been pushing for direct talks between the Israelis and Palestinians for many weeks. A planned meeting between Mr. Peres and Mr. Arafat has been frequently postponed at the insistence of Mr. Sharon. However, if the ceasefire holds, that meeting is expected to take place within days.