JERUSALEM -- Israeli Cabinet ministers assembled around a TV set and watched a video of a Palestinian mob ambushing an Israeli soldier. When the tape stopped, the decision was unanimous: Israel was suspending its West Bank troop withdrawal.

Prime Minister Benjamin Netanyahu said Wednesday's attack, in which the trapped soldier was repeatedly struck in the head, was a result of incitement by the Palestinian Authority against Israel."I cannot allow myself to see Israeli citizens being lynched, or about to be lynched, by a crazed mob that received incitement from Palestinian officials," Netanyahu said in explaining his decision to hold up the land-for-security agreement.

Meanwhile, violence erupted for a second day Thursday in three traditionally Arab east Jerusalem neighborhoods.

Netanyahu said he would only resume implementation once Palestinian leader Yasser Arafat publicly dropped plans to announce a state in May and accepted Israel's criteria for the release of Palestinian prisoners.

The Palestinians appealed to the United States for help. Arafat said Thursday that Netanyahu is "violating completely" the Wye agreement.

U.S. State Department spokesman James Rubin sided with the Palestinians, saying the Wye River peace agreement "should be implemented as signed."

The crisis hit just 10 days before President Clinton was to arrive to oversee the next phase of the peace accord. In mid-December, 5 percent of the West Bank is to be transferred from Israeli control to joint jurisdiction and Israel is to release 250 more Palestinian prisoners.

White House spokesman David Leavy said the Clinton trip was still on. The administration said it is considering a request by Israel for Clinton not land at the newly opened Palestinian airport, saying this would boost Palestinian claims to independence.

In three Arab neighborhoods of Jerusalem Thursday, Palestinians threw stones at police and Israeli motorists. Six Israeli police officers and two Israeli civilians were injured by rocks and a Palestinian was struck by a rubber bullet fired by police to disperse stone throwers on the Mount of Olives.

In the main clash on Salah Eddin Street, the main thoroughfare of Arab east Jerusalem, undercover policemen wearing checkered Arab headdresses drove up to the stone throwers, jumped out of their van, fired in the air and arrested four Palestinians. In all, 18 Palestinians were arrested.

In Israel, meanwhile, the new confrontation with the Palestinians helped stabilize Netanyahu's shaky coalition.

In response to the Cabinet's decision to suspend implementation of the Wye agreement, hard-line coalition legislators said Thursday they would not support an early elections bill as initially planned.

The legislation was to have come before parliament Monday, but sponsors said they might delay the vote.

The latest cycle of violence began Wednesday morning when an Arab street cleaner was stabbed to death, apparently by a Jewish extremist, in a mixed Arab-Jewish neighborhood of Jerusalem.

In response, dozens of masked Palestinians blocked roads in traditionally Arab east Jerusalem with burning tires and threw stones at cars. Israeli police fired rubber bullets.

Also Wednesday, students bused to the West Bank town of Ramallah to demonstrate for the release of Palestinian prisoners began stoning a car with Israeli license plates.

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Israeli soldier Assaf Meyara was pulled out of his car and beaten before escaping. He was hospitalized with head injuries.

After the attack on the Israeli soldier, Netanyahu convened his security Cabinet and played a videotape of the incident.

Justice Minister Tsahi Hanegbi said the atmosphere in the Cabinet room was very tense during the screening.

"There was a unanimous decision," Hanegbi said. "We all said to ourselves that we had to stop this quickly because if we do it after we give the territory, we will be shirking our responsibility."

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